General liability rates have been increasing over the past number of years and increases are expected to continue for most liability lines in 2023. This trend is projected to continue as the segment continues to be adversely impacted by rising claim frequency and severity primarily driven by social and economic inflation. Other downward rate pressures include the cost of medical care and litigation funding.

“The market is seeing heavy class-of-business-based market disruptions, with businesses such as hospitality seeing the most tightening," says Matt Huels, executive underwriting officer, small commercial, Markel. “Additionally, insureds with difficult risk characteristics, such as challenging loss history or worse-than-average in-class exposures, are seeing double-digit rate increases, along with tightening terms and conditions." 

Further, “claims are not localized to one specific industry and the reasons for losses are specific to the operation," says Justin Cardullo, vice president and head of general liability, Hiscox. “Warehousing claims are typically quite different from the losses that come from a restaurant or a product manufacturer."

In the excess & surplus lines “we are seeing prior years' steep increases on excess casualty stabilize and plateau across most classes of business," says Bill Wilkinson, president, national casualty, Risk Placement Services (RPS). “High-hazard classes will continue to feel a bit of pain, as well as more difficult construction projects located in areas where there isn't a lot of eager capacity, like South Florida and New York City."

In addition, there are a number of developing and emerging risks that agents need to continue to monitor. These include risks relating to “modular construction and when that product is considered completed; increased use of green building materials, mass timber and cross-laminated timber for construction projects; increased use of artificial intelligence (AI) and potentially even robotics in warehousing and on job sites; habitability claims spreading beyond California; per- and polyfluorinated substances (PFAS); and human trafficking," says Russ Stein, area executive vice president, RPS.

Overall, the general liability market is facing a “dynamic economic environment with supply chain disruptions, elevated medical costs, and rising wages—all of which play into premium and loss trends across the marketplace," says John Sakakeeny, head of general liability, umbrella, excess product lines, The Hartford.

So, how can agents assist their clients and ensure they are continually adding value to the relationship?

Here are three tips for agents to prepare clients to deal with these challenges: 

1) Communication is key. Understanding each client's unique exposure is essential. “The most important meeting is the pre-renewal meeting with the insured at least 150 days out from the effective date to determine their renewal exposures and concerns," Stein says.

“Agents also need to communicate frequently with underwriters to set the expectations for renewal and determine if there will be any capacity, coverage or pricing changes," Stein says. “The more communication during this process—good, bad or indifferent—the less that all parties will end up being surprised." 

And as premiums and underwriting restrictions increase, clients appreciate the information and explanations that agents can provide. “Being able to thoughtfully articulate inflation's impact on an insured's exposure and policy premium is challenging, but also incredibly valuable," Huels says. “When one observes that corrective construction costs are approximately 40% higher than they were at the end of 2019, one can understand why a construction defect claim today costs an insurance carrier so much more than it did even three years ago."

2) Submit a quality submission to the underwriter. “From an underwriter's perspective, if it doesn't look like the insured and agent took the time and care to prepare a quality submission, the underwriter probably won't take the time and care to deliver the best available result," Wilkinson says.

“It is important to note that while loss costs and nuclear verdicts are not going away, a quality submission, communication and understanding of the underwriting and quoting process—along with a clarified timeline on the renewal by both brokers and underwriters—can alleviate the stress and difficulty in the market," he adds.

In developing a well-rounded profile for submission, “I would encourage agents to recommend to their clients to have a written employee handbook that is updated regularly, annual health and safety training on how to minimize risks for employees and customers, and access to high quality legal counsel to help navigate social inflation," Cardullo says. 

3) Discuss what's coming down the pike. “Agents should stay current with legal, regulatory and policy developments, and consider asking their clients if they have exposure to emerging environmental risks so they can take corrective actions," Sakakeeny says. “Dig into emerging risks like PFAS and help clients mitigate any potential exposure." 

Further, many businesses have changed significantly since the coronavirus pandemic. “Agents who know their clients and how their exposures have evolved or changed over the last few years are invaluable," Huels says. 

AI is presenting both challenges and opportunities for the general liability market. “From a service perspective, AI is poised to make reviewing and quoting quicker and more accurate than ever, thanks to the ability to gather data and quickly learn about the customer," Cardullo says. “For businesses looking to tap into AI, there are new potential risks such as AI giving bad advice, or IP theft." 

Being in a position to offer risk mitigation as well as risk management solutions can “help agents during these rapidly changing times, supplementing their training and increasing their awareness of risk management measures," Huels adds.

Olivia Overman is IA content editor.