Cyber Rates Decline While Commercial Auto Costs Climb in Q4 2024

The Council of Insurance Agents & Brokers (CIAB) released its Q4 2024 "P/C Market Survey," highlighting premium trends across various lines of commercial insurance. The report found that overall premiums increased by an average of 5.4 percent in the fourth quarter, marking the 29th consecutive quarter of rate hikes across all account sizes. However, the report also indicated that rate increases have started to stabilize, with most lines experiencing either modest growth or slight declines compared to Q3 2024. 

Per the report, cyber insurance premiums decreased by 1.8 percent, making it the only line to see a meaningful drop. This decline was attributed to increased capacity and heightened competition among insurers in the US cyber market. Additionally, the report noted that improved cybersecurity measures and risk mitigation strategies have led to declining loss ratios, even as ransomware attacks remained a concern. These factors have allowed for a softening in cyber pricing, which had previously experienced steep increases following the surge in cyber incidents in 2020 and 2021. 

According to CIAB, commercial auto insurance remained the most challenging line in Q4 2024, posting an 8.9 percent premium increase, the highest among all lines. This marked the 54th consecutive quarter of rising commercial auto rates. Respondents attributed the increases to higher claims frequency and severity, with 50 percent of survey participants reporting an uptick in claims activity and 41 percent citing a reduction in underwriting capacity. The report also referenced an AM Best analysis from November 2024, which found that the average loss per commercial auto liability claim has doubled since 2014. 

Per CIAB, several factors contributed to the rising cost of commercial auto insurance. Increased litigation, rising repair costs, and social inflation all played a role. Additionally, the growth in fleet electrification—with research indicating a 233 percent increase in electric vehicles in commercial and government fleets from 2019 to 2021—has added new underwriting complexities, as electric vehicles tend to have higher repair costs and different risk exposures than traditional internal combustion engine vehicles. 

According to CIAB, umbrella insurance also experienced notable rate increases, reflecting continued concerns over high jury verdicts and large settlements in liability cases. Meanwhile, directors and officers (D&O) liability, workers compensation, and employment practices liability insurance (EPLI) saw relatively stable or declining premium trends, suggesting that competition and improved risk management are helping moderate price increases in these lines. 

Per CIAB, while some lines continued to face challenging market conditions, the broader trend suggests a leveling out of premium hikes. One survey respondent from a large Northeastern brokerage summarized the quarter by stating, "Q4 2024 seemed to be a stable quarter apart from commercial auto and umbrella." This sentiment was echoed throughout the survey, with many respondents noting that market conditions remained largely predictable outside of a few high-risk areas. 

As the industry moves into 2025, the report suggested that market conditions may continue to stabilize, though external factors such as inflation, legal trends, and evolving risk landscapes will remain key drivers of pricing across all commercial insurance lines.