Commercial insurance rates stabilize amid market shifts – report

Commercial insurance rates stabilize amid market shifts – report | Insurance Business America

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Commercial insurance rates stabilize amid market shifts – report

Analyst highlights factors contributing to improved performance across sectors

Insurance News

By
Jonalyn Cueto

The latest Insurance Marketplace Realities report from global advisory firm WTW (Willis Towers Watson) has revealed a balanced and stable outlook for commercial insurance rates in North America.

According to the report, most lines of business have seen steady conditions, with no dramatic shifts in pricing throughout 2024. Jon Drummond, head of broking, North America at WTW, noted that the market has been responding to emerging trends in a measured way.

“The industry has not categorically rewritten its position on any one line of business, but rather has taken micro-actions reacting to emerging trends,” Drummond said.

Increased competition, driven by new capital inflows into both the reinsurance and retail sectors, has also contributed to the stability. This has been especially impactful for first-party business lines, which faced capacity challenges earlier in the year. However, the surge in capital has excluded umbrella and excess liability lines, which continue to experience higher rates.

The report has indicated that financial lines, in particular, are benefiting from increased capacity, fostering soft market conditions. In the directors and officers liability sector, there is growing attention to rate adequacy, especially in mid-excess layers, though WTW has suggested it is still too early to label this a trend.

In contrast, the casualty market – particularly umbrella and excess liability – has experienced the most disruption. Rising loss costs, influenced by factors such as litigation financing, legal system abuse, and the risks associated with “forever chemicals,” have led insurers to reduce capacity while pushing renewal rates to the higher end of single-digit increases, the report highlighted.

WTW said the cyber insurance market, meanwhile, is showing signs of easing, with predictions of flat to mid-single-digit rate decreases for most renewals in the near future.

The WTW report also noted that while evolutionary changes are occurring across various sectors of the insurance industry – such as those driven by climate change and the entry of new capital – the overall market is expected to maintain relatively stable renewal conditions across most business lines through the end of the year.

However, Drummond cautioned that the market’s stability could be disrupted by unforeseen events, noting that “the current state of affairs might only be one major hurricane away from being upended.” With Hurricane Milton looming, the potential for market disruption remains a concern.

Key price predictions for 2024

Property

CAT-exposed

-5% to +10%

Non-CAT exposed

-5% to +5%

Domestic casualty

General liability

+2% to +8%

Umbrella (high hazard)

+8% to +15%

Excess (high hazard)

+10% +

Excess (low hazard)

+2% to +7%

Workers’ compensation

–5% to +2%

Auto

+4% to +10%

International

Flat

Executive risks

Directors’ and officers’ public company (primary)

-10% to Flat

Directors’ and officers’ private / not-for-profit (overall)

-10% to Flat

Side A / DIC

-10% to Flat

Errors and omissions (large law firms)

+2% to +8%

Employment practices liability (primary)

-5% to +5%

Fiduciary (financial institutions)

-5% to + 5%

Cyber

Cyber

-5% to Flat

Political risk

Most risks

Flat to + 20%

Terrorism and political violence

Terrorism and sabotage

Flat to +10% Non-volatile territories

+10% to +25% Volatile territories

Political violence

Flat to +15% Non-volatile territories

+15% to +30% Volatile territories

Do you have something to say about the latest projections? Share your thoughts in the comments below.

Commercial insurance rates stabilize amid market shifts – report