US commercial P&C rate increases continue but cyber slows

The second quarter of 2023 has continued to see premium increases in the US commercial P&C market, according to the Council of Insurance Agents & Brokers’ (CIAB) Commercial Property/Casualty Market Index Q2/2023. It was the 23rd consecutive quarter of premium increases, with premiums rising by 8.9% across all account sizes, slightly up from the previous quarter’s increase of 8.8%.

The CIAB said some respondents reported that clients were “rate fatigued”, leading to them purchasing lower limits or “biting the bullet” and increasing their deductibles to keep premiums down.

Commercial property had the highest reported increase out of all lines, at 18.3%. Respondents suggested that natural catastrophe losses were one of the main contributors to high premiums, high deductibles and reduced limits. The CIAB highlighted losses from losses from the recent series of severe thunderstorms in the US, and added that coastal property was also hit hard, with several respondents mentioning that it was “very difficult to insure in the standard markets.”

The survey revealed that difficulties with reinsurance also compounded existing issues with the commercial property line, with multiple respondents describing carriers either cutting capacity or non-renewing existing accounts altogether due to how challenging it was to find reinsurance capacity.

Most lines of business recorded increases roughly comparable to or slightly higher than Q1. Cyber was a notable exception to this, with respondents reporting an average increase of 3.6% for this line, down from 8.4%. The CIAB said 40% of respondents also noted an increase in underwriting capacity, up from the previous quarter during which 30% reported an increase, suggesting more carrier appetite for the line.

The survey showed that only 22% said there was an increase in cyber claims ­– down from 39% last quarter and down significantly from 72% at the beginning of 2022. “Success at mitigating cyber losses could be contributing to renewed interest in underwriting the line and less severe premium increases,” said the CIAB.

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