2024 Q3 Insurance Outlook: Stable Rates with Focus on Risk Management

According to HUB International's Q3 2024 Outlook: Mid-Year Rate Report, while rates across most lines of insurance are expected to stabilize, organizations in high-risk or catastrophe-prone areas may still experience significant rate increases. HUB also notes that businesses with poor claims histories or loss control challenges are more likely to face rate hikes, although these increases are expected to be more manageable than in previous years.

HUB stresses that the focus should shift from simply securing stable rates to enhancing business resilience against potential disruptions. These disruptions could be caused by natural disasters, cyber attacks, civil unrest, or geopolitical instability. According to the report, while parametric insurance and captive insurance solutions are viable options for businesses in high-risk areas, a strong business interruption (BI) plan is essential for all organizations. Recent events, including the CrowdStrike IT outage and Hurricanes Beryl and Debby, illustrate the far-reaching consequences of business disruption, per the report.

The report reveals that business interruption is a top concern for businesses, second only to cyber crime, based on a survey of 3,000 risk professionals. HUB highlights that it's not just natural disasters that are causing concern but also man-made disasters and emerging risks like artificial intelligence. The report advises businesses to reassess the duration of their BI coverage, as the traditional 12-month period may no longer suffice for recovery, especially after major weather events. HUB recommends working closely with brokers to simulate potential disruptions and identify any weaknesses in current risk management plans.

As for specific insurance lines, the report provides detailed rate guidance for the third quarter of 2024. For commercial auto insurance, HUB anticipates rate increases of 5 percent to 10 percent due to increasing loss trends. General liability rates are also expected to rise, potentially up to 10 percent, depending on the client's loss experience. However, workers compensation remains stable, with rates fluctuating between a 3 percent decrease and a 3 percent increase. Notably, directors and officers insurance, particularly for private companies, is expected to remain highly competitive, with some premiums decreasing by as much as 10 percent, HUB said.

HUB also sheds light on industry-specific trends, noting that agribusiness could see rate increases of up to 20 percent, while cannabis operations are likely to experience rate reductions or stabilization. According to HUB, the entertainment industry will face rate increases ranging from 5 percent to 10 percent, especially for live events, as insurers become more cautious after the pandemic-induced pause in festivals and tours.

HUB advises businesses to review their risk management strategies, particularly focusing on business continuity and disaster recovery plans. It also stresses the importance of researching the financial stability of insurers, as several companies in catastrophe-exposed states like Florida and California have folded in recent years, leaving policyholders vulnerable. According to HUB, seeking top-rated insurers, even if they are not the least expensive, is critical to ensuring proper coverage.