Stable US commercial rates expected despite Helene: Hub

Commercial P&C rates in the US will likely be stable for the rest of this year, with declines in several market sectors, even though primary and excess liability prices continue to rise, according to brokerage Hub International’s recently published third-quarter rate report.

Commercial property rates, which varied between 10% decreases and 5% increases in the third quarter, will likely remain stable despite losses from Hurricane Helene, said Mike Chapman, national US director of commercial markets and president of Hub’s south and central regions, in an interview discussing the report. Hub focuses on mid-sized businesses.

Modelling firm KCC said on Wednesday that insured losses from the storm will likely be about $6.4bn. The figure does not include coverage with the US National Flood Insurance Program (NFIP). The storm was unusual because much of the damage was inland in parts of Georgia and North Carolina.

A significant amount of damage caused by Helene will be uninsured, Chapman said.

“People in Asheville, people in a lot of Georgia, they don’t carry NFIP,” he said.

Commercial insurers’ losses from Helene will likely be below their reinsurance attachment points, and unless there is another major storm during the 2024 season, the event should not significantly disrupt the market, Chapman said.

Property insurers increased rates and property valuations substantially between 2021 and 2023.

US general liability and excess liability rates were flat to up 10% in the third quarter, according to Hub.

Since courts fully opened after the Covid-19 pandemic, jury awards in several states have escalated, Chapman said.

“All the cases that were being settled over Zoom and arbitration are going to jury trials again,” he said. “Social inflation and nuclear verdicts – they’re back.”

Commercial auto rates, which have been rising for years, were up between 5% and 10% in the third quarter, the report says.

“Insurers can’t get the rates up fast enough to offset the cost of claims,” Chapman said.

In other lines, directors and officers liability rates ranged from 10% decreases to 5% increases in Q3, cyber liability ranged from 10% down to flat and workers compensation rates ranged from 3% down to 3% up.

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