Report Suggests Hurricane Ian Ended Decelerating Property Rate Trend

Hurricane Ian "effectively ended" the decelerating rate trend seen in the commercial property insurance market during the first half of this year, according to a third-quarter market analysis from broker Woodruff Sawyer.

"Property insurance buyers can expect rates to head up again even if their portfolios don't include Florida properties," Woodruff Sawyer said in its "Commercial Lines Insurance Market Update—Third Quarter 2022."

The report notes that property insurers had already been grappling with the impacts of inflation throughout the year and that non-hurricane catastrophes have increased in frequency and severity. In addition, reinsurance capacity is expected to be constrained in 2023, affecting rates for all property insurance buyers.

The commercial casualty segment was largely unchanged in the third quarter from the prior three months, Woodruff Sawyer said. General liability and auto rates continued to increase, though at a slower pace.

"Casualty buyers can continue to expect to pay more for their lead umbrella layers, but their overall excess liability spend may be less than in previous quarters due to more competition in the market," the report said.

With workers compensation remaining a profitable line of business, most buyers can expect a decrease in their workers compensation costs, Woodruff Sawyer said.

"We're finally starting to see some improvement in the cyber market," the report said. "Premiums are still increasing but at a slower rate, and we're seeing more insurers competing on primary and lower excess layers. Underwriters continue to focus on security controls, and those companies that have invested in strong cyber security can expect to see the best renewal results."

Buyers in the directors and officers (D&O) market can expect rate decreases, Woodruff Sawyer said.

"Although the severity of settled securities claims remains high, the number of filed securities class actions decreased in the last 2 years, and this trend appears to be continuing in 2022," the report said. "The reduced number of filed securities class actions, coupled with several new insurance carriers in this space, has combined to create a favorable market for D&O buyers, whether they be public or private companies."