A new USI Insurance Services report predicts that in 2024, commercial property insurance rates are expected to rise, but not at the same pace as seen in 2023.
“Our projections call for rate increases of 5% to 15% for non-catastrophe-exposed properties with minimal loss history and good risk quality; 15% to 30%+ for CAT-exposed properties with minimal loss history and good risk quality; and 15% Up to 30%+ rate increases for those risks with poor loss histories or poor risk quality, says the company’s 2024 Commercial Real Estate and Casualty Market Outlook.
The upper end of the above ranges is for risks with a high concentration of values in critical CAT areas, said the report, which presents forecast insights from USI’s national practice leaders. Insureds facing non-renewal by existing insurance companies; Insureds with unresolved risk quality issues; Or insureds with large, unstable claims.
The report continued: “We expect the majority of renewals to end with less than a 20% rate increase, but insurers that fall into one of the above categories may see a higher outcome as outlined.”
In comparison, USI shared that on a year-over-year basis, CAT properties with minimal loss histories and good risk quality rose 25% to 150% in 2023, and CAT properties or non-CAT properties with poor loss histories or poor risk quality rose by the same percentages.
The Insurance Institute of America said that more moderate rate increases for reinsurance treaties, a slowdown in inflationary pressures, and insurers’ drive to reduce CAT losses “suggest that the property insurance market is better positioned to handle expected loss expectations, as long as underwriting discipline prevails over the long term.” the long”. a report.
According to the Swiss Re Institute, since 1992, the average annual growth trend of global natural catastrophe insurance losses has been 5% to 7%. The institute predicted in March 2023 that, regardless of year-on-year fluctuations, “insured losses will continue to grow on trend, even as amplifiers such as inflation diminish.”
As the property insurance market adapts to increasing CAT losses, shifting insurer appetites and more selective deployment of capacity, USI also expects:
- Less volatility in replacement cost indices as inflation declines.
- Growth of the surplus lines market.
- Increased interest in transferring alternative risks.
- Increasing the role of technology and artificial intelligence in underwriting decisions.
- The updated CAT models are expected to impact market segments.
USI expects steady increases of up to 5% in the general and product liability markets, noting that many organizations continue to shift to loss-sensitive programs despite moderating pricing to further reduce the cost of risk.
In the auto insurance space, USI reports that “virtually all auto liability insurance providers continue to push for rate increases,” adding that while “new capacity continues to come in via telematics programs, traditional insurers have reduced their capacity from While exiting some poorly performing countries.”
More report highlights can be found below.
Canopy/Trailing: USI expects price increases to be limited to 5% to 15%, and markets will offer increased limits of $15 million to $25 million.
Workers compensation: The workers’ compensation rate and pricing environment in most states should continue to remain competitive in 2024 for both guaranteed cost buyers and loss-sensitive programs, with rate reductions being more common than rate increases, the report said.
Saber: USI found that ransomware and commercial email compromises are becoming more interconnected as attackers can use compromised email accounts to initiate ransomware attacks, making the cyber threat landscape even more dangerous. However, prices have remained stable, with a fixed renewal rate of 15%. USI expects rates to remain the same in 2024.
Directors and officers: The report expects D&O rates for public companies to be flat and even decline by 7.5% in the first half of 2024.
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