Gallagher sees constant pressure on P&C rates; bets hardening will last the year

All the ingredients are in place for further P&C market hardening in 2022, clearly in evidence in early policy renewal negotiations, chief executive officer of global broker  Arthur J Gallagher said late Thursday (January 27).

“Looking forward, I see difficult P&C market conditions continuing throughout 2022 because our risk bearing partners remain cautious on rising loss costs,” CEO Patrick Gallagher told his company’s Q4 earnings call.

Corporate deals negotiated in January show carriers unrelenting in rate demands, Gallagher noted.

“Underwriters are not backing off from their need for rate; we see it every single day,” he said. “We are into the renewals now deep into the first quarter and we are not seeing rate relief in any way, shape, or form.”

Property coverage faces upside pressure as “replacement cost inflation and the increase in frequency and severity of catastrophic losses are causing underwriters to rethink rate accuracy,” he added.

Underwriters’ caution on the casualty side follows the ever-present spectre of social inflation, select elements of the price inflation reading and “the potential for an increase in claims frequency as global economies further recover,” he said.

Both sides of the market can get a squeeze from rising reinsurance costs as well, he indicated.

“So I think carriers will continue to push for rates and I don’t see a change in the near-term,” Gallagher said.

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