Insurers set to push for more property, liability rate hikes in US renewals

US carriers are expected to seek further significant rate increases at renewals over the next few months, citing sustained increases in property catastrophe losses and surging liability awards, particularly on commercial auto risks. While property insurers already imposed significant price hikes this year, a lack of new capacity entering the market will enable underwriters to push rates still higher, say broker and insurer executives. Liability rates, which have not seen the same level of increases, are also set to rise, with the biggest hikes likely in umbrella and excess layers for commercial auto risks, which are increasingly being penetrated by large court awards and settlements, they said during meetings at the Insurance Leadership Forum being held in Colorado Springs, Colorado, this week. The conference, organised annually by the Council of Insurance Agents & Brokers, is a key market meeting and draws top executives from insurers, brokers, reinsurers and other industry companies. Property and property cat rates remain stable-to-hard for primary and reinsurance placements, because, unlike in previous hard markets, little new capital is entering the sector, said Steve McGill, CEO of McGill and Partners. “There’s a concern that if you’re a new player coming in, the volatility is significant and you aren’t going to get the returns commensurate with the level of volatility,” he said. Policyholders with minimal losses and low catastrophe exposures will likely see low- to mid-single-digit increases, said Marc Kunney, president-risk management at EPIC Insurance Brokers & Consultants. “But for everybody else – those with bad loss histories or significant cat-exposed portfolios – they will probably continue to get double-digit increases,” he said. Much of the trend of rising rates is being driven by reinsurance pricing and the restructuring of reinsurance programmes, where primary insurers have had to retain more risk, said Trevor Baldwin, CEO of BRP Group. “I think the primary guys still have another 18-plus months of rate action,” Baldwin said. Rate increases over the next year will likely range from about 8% to about 17%, depending on the account, he said. The rising prices may eventually attract more capital to the market, said Michael Chang, head of corporate risk and broking, North America, at Willis Towers Watson PLC. “I am hearing more people say they want to take advantage of the rates that are in property, so as more people want to take advantage and more supply becomes available, you’re going to start to see some relief over time on pricing,” Chang said. Increases in liability rates will likely be driven by commercial auto, where losses are increasing, insurers and brokers say. According to a report issued by AM Best this week, commercial auto losses soared from breakeven in 2021, which was affected by less driving during the pandemic, to $3.3bn in 2022. The commercial auto sector is being hit hard by “social inflation”, or higher court awards and settlements, said Mike Karmilowicz, president and CEO of Everest Insurance, a unit of Everest Group. “We’ve been getting rate on commercial auto for eight-plus years; it’s more than a rate issue, it’s the overall inflation and severity and frequency,” he said. Increased awards for auto-related injuries and deaths for large trucking fleets are causing concerns, said Mike Rice, CEO of CAC Specialty. “It’s forcing buyers of insurance to take much bigger self-insured retentions. They are transferring cat, but they’re taking on huge amounts of potential loss and paying more money for it,” he said. Policyholders that invest in loss controls, such as improved driver training and telematics, are getting some relief from underwriters but it remains a tough market for most auto policyholders, said EPIC’s Kunney. Commercial auto policyholders with poor loss experience will “almost certainly” see double-digit rate hikes, he said. This article first appeared on our sister website Business Insurance. For further news from Business Insurance, please click here.

Insurers set to push for more property, liability rate hikes in US renewals

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