Buyers in US faced lower premium increases in Q4 2023
Premium increases in the US insurance market slowed across the board in the fourth quarter of 2023, according to The Council of Insurance Agents & Brokers (CIAB).
Its latest quarterly survey showed that the average premium increase across all account sizes was 7%, down from 8.1% in the previous quarter.
This was still the 25th quarter of consecutive increases, but almost all lines of business recorded smaller increases than in the previous quarter. Cyber premiums increased by just 0.7%, and D&O was even lower, at 0.1%. Workers compensation decreased for the eighth consecutive quarter at an average of 1.8%.
Commercial property premiums, on the other hand, rose by 11.8%, but even this was down from 17.1% in the previous quarter – though this was still the highest increase in premiums among all lines, according to the CIAB. Most respondents said that commercial property was the main challenge when it came to placement.
“As with the previous quarter, justifications from carriers included trouble with reinsurance capacity and pricing, increased natural disaster claim frequency and severity due to climate change, and inflation,” said the CIAB. “Capacity for the line continued to fall and underwriters prioritised requests for information on valuations and exposures like wind and hail.”
Broker respondents to the survey said that on average, 62% of their clients felt some level of rate fatigue in the fourth quarter, lower than the previous quarter’s average of 70%, possibly due to the lower increases, the CIAB said. “On the other hand, respondents reported that on average, 55% of their clients felt burdened by carrier requests for information, up from 45% last quarter. Likewise, 45% of clients told their brokers they had some level of mistrust for the industry, also higher than last quarter’s 42%,” it added.
The CIAB noted that respondents suggested this partially stemmed from the fact that “clients felt carriers would add additional underwriting requirements or information requests every year as well as impose premium increases – so in the clients’ view, not only would they have to absorb the cost of risk mitigation improvements, they would also have to pay additional premium anyway.”
Small and large account premiums increased by an average of 6.7% and 6.1%, respectively, while medium-sized accounts had the highest increase for the third consecutive quarter, at 8.2%.
