Commercial Insurance Market Shows Stability as Rates Moderate
October 11, 2024
Commercial insurance rates across North America have demonstrated stability throughout 2024, according to WTW's latest Insurance Marketplace Realities report.
Jon Drummond, head of broking, North America, WTW, commented, "The industry has not categorically rewritten its position on any one line of business, but rather has taken micro-actions reacting to emerging trends."
WTW reports that increased competition for premium market share has emerged in the reinsurance and retail sectors, with the exception of umbrella and excess liability lines. This competitive environment has been particularly influential in first-party business, where capacity constraints were initially a challenge earlier in the year.
Capacity continues to influence soft market conditions, especially in financial lines. While the trend is still emerging, WTW noted growing attention to rate adequacy in mid-excess directors and officers (D&O) liability. The cyber-insurance market also projects a slight decrease in rates for most upcoming renewals.
The casualty market, specifically umbrella and excess liability, has seen notable disruption due to rising loss costs driven by legal system abuse, litigation financing, and emerging risks such as forever chemicals. These factors have resulted in reduced capacity and higher renewal rates, which now exceed high single-digit increases.
Despite these challenges, WTW's report suggests that the market will maintain relatively stable renewal conditions across most lines as the year concludes. However, Mr. Drummond cautioned that major events such as hurricanes could still disrupt the market's current balance.
Mr. Drummond added, "It goes without saying that the current state of affairs might only be one major hurricane away from being upended, and with Milton knocking on the door, the probability of disruption is growing."
| Insurance Market | Rate Change |
|---|---|
| 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 | |
| D&O public company (primary) | -10% to flat |
| D&O private/not-for-profit (overall) | -10% to flat |
| Side A/difference-in-conditions (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% nonvolatile territories |
| +10% to +25% volatile territories | |
| Political violence | Flat to +15% nonvolatile territories |
| +15% to +30% volatile territories |
While the insurance market faces evolving challenges, including climate change and new capital entrants, WTW anticipates a relatively balanced close to the year for most sectors.
October 11, 2024
