The Lloyd’s disability markets have had a few years of upheaval, primarily due to the international financial markets and low interest rates. For the past three years this insurance market has been pushing (kicking and screaming by many) with higher premiums and lower commissions, as well as more and more conservative terms and conditions in coverages.
As of 2023, these markets have finally slowed their big shifts in changes and become more stable and consistent. These changes have impacted all Lloyd’s Coverholders, which in turn, impact producers who sell excess and supplemental disability programs.
While these changes were happening some Coverholders early on had to adopt while others took an aggressive approach (contrary to market direction) and offered terms and conditions not seen before, such as individual policies with a 30-day cancellation clause. This allowed them to keep rates drastically lower. However, those offering the lesser quality wording are now facing the higher premiums the markets are demanding as well.
What does this all mean?
2024 and beyond are poised for more consistent and strong markets. Pricing is higher than three years ago, but so is the cost of a Big Mac! More stability of the markets also means less radical pricing and terms within the market.
Most standard disability carriers have increased their limits making the attachment point for excess disability insurance higher as well. Also, many carriers are now offering coverages to occupations which, historically, were not written, such as social media influencers and others that may actually work from home.
Does this mean fewer sales in the excess and special risk disability markets? Not at all! The Special risk disability programs from Lloyd’s address numerous situations which the standard disability carriers are unwilling to write. This may include occupations that are still “undesirable” as well as severe health issues (impaired risks), and there is still a need for layers over and above what is available for personal disability as well as business disability coverages.
Based upon a recent Milliman report, 45 percent of all disability sales are now written on a GSI basis. Top executives and professional occupations with high incomes still look to excess disability insurance also written on a GSI basis.
Bottom line, as rough and bouncy as 2020 to 2023 has been in these markets, these same markets are once again offering great products at reasonable (not cheap) prices with strong (not ultra-liberal) terms and conditions.[TP]
