North American buyers face hardening rates into 2024: WTW

North American insurance buyers continue to see rate increases across most lines, albeit primarily in the single digits, while the property market remains “relatively hard”, WTW says in its Insurance Marketplace Realities 2024 report.

Certain clients and industry sectors still face spiralling premiums at renewal, prompting greater takeup of alternative solutions such as captives and parametrics, adds the broker. Property, auto liability, cyber risk and terrorism coverage fall into this camp, it adds.

Despite a relatively calm Atlantic hurricane season, the insurance industry will close 2023 with more than $100bn of property losses, due to the combined impact of inflation, the Maui wildfires and convective storms, according to the report.

The North American property market will try to lean into the hard market for as long as possible, though that could be increasingly difficult if new money enters on 1 January, WTW says.

The casualty market may seek rate increases amid a constricting capital base and ongoing remediation of liability portfolios by insurers, it adds.

Among the report’s predictions:

• Property rates for catastrophe-exposed risks will increase 10% to 25% next year while rate increases for non-catastrophe exposed risks will be in the flat to 10% range.
• Cyber rates will range from 5% decreases to 5% increases as the market continues to stabilise.
• General liability rates will increase by one percentage point to 4%.
• Umbrella rate increases will be in the 4% to 8% range and in the 10% to 15% range for heavy auto, large fleet risks. Excess liability will see increases of 2% to 7%, and 10%+ for heavy auto/large fleet risks.
• Public company primary directors and officers liability rates will range from 10% decreases to flat as competitive market dynamics continue, but the extent of decreases may begin to taper off.
• Workers compensation will see rates decrease by three percentage points to 1%.

“As the reinsurance market continues to exert its influence over retail insurers and capital distribution, our clients may face more uncertainty in 2024 across both property and casualty product lines,” said Jon Drummond, head of broking, North America, WTW, in a statement.

The concept of a bifurcated market may become even more prevalent across multiple lines of business and industries in the foreseeable future, he said.

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