Changes from Washington DC in the form of trade, taxes, infrastructure and regulation could alter the dynamics of the commercial insurance market that have sustained prolonged soft market conditions, according to a Willis Towers Watson report.
The US may reduce its federal corporate tax rate to around 15-25 percent. Currently, the US has some of the highest corporate tax rates in the world at 35 percent, nearly double the UK rate of 20 percent.
Following his overarching slogan “America first,” President Donald Trump may raise tariffs, introduce border taxes that penalise imports relative to exports, or potentially both. And he is expected to boost infrastructure investments.
"Change could be coming in all of these areas, with the potential to affect our clients, carrier partners and, therefore, the advice we offer," said Joseph Peiser, head of broking for Willis Towers Watson North America.
The report, '2017 Marketplace Realities' suggested that the commercial insurance market remains stable and buyer-friendly ahead of insurance programme renewals.
The fluidity of capital was identified as a key driver of the current market conditions.
Willis has attributed these favourable conditions to ample capacity which has allowed the industry to absorb marketplace consolidation in the carrier space and a rise in cat losses, although recent losses continue to remain below historical averages.
The property market in particular continues to sustain an attractive market for buyers, despite deteriorating underwriting results and a 32 percent increase in cat losses year-on-year, the report said.
Furthermore, the casualty market remains favourable for the most part, with a few notable exceptions.
For example, New York City construction projects, as well as energy and trucking risks are experiencing a tight casualty market.
Peiser continued: “In terms of the marketplace mechanics and price predictions that are the focus of this publication, change is one thing we haven’t seen in a while. Will the transformation at hand turn this long, soft market?”
Willis Towers Watson, Report, Donald Trump, Joseph Peiser, North America