US P&C rates moderate but commercial property spikes

The US P&C market has once again seen moderation in premium price increases in most lines, although commercial property saw a big spike in rates, according to the Council of Insurance Agents & Brokers’ (CIAB) Quarterly P/C Market Survey. Premiums overall in the first quarter of 2023 rose for the 22nd consecutive quarter, with an average increase of 8.8% across all account sizes, up slightly from the 8.0% recorded the previous quarter. Large accounts saw the highest increase, at 11.4%. Most lines of business experienced premium increases comparable to, or slightly lower, than the previous quarter. The biggest rise in premium rates was seen in commercial property, which grew by 20.4% in Q1 2023, and according to the CIAB it is the first time since 2001 that this line experienced an increase of over 20%. “Respondents agreed that this line had been impacted the most by inflation, mainly due to increases in the cost of repairs. That, in combination with recent severe natural catastrophes like Hurricane Ian, as well as supply chain issues with replacement materials, all contributed to driving up lost costs which, in turn, pushed up premiums,” said the broker organisation. It noted that property loss trends also brought underwriting changes for the property line, with carriers cutting capacity significantly. The survey showed that 85% of respondents reported a decrease in underwriting capacity for commercial property, together with “significant terms and conditions changes, larger deductibles, more significant exclusions, and reduced coverage”. There was some good news for buyers. Workers compensation premiums fell further this quarter, at an average of -0.5%, while cyber saw a significant drop in rate increases, from an average 15.0% increase for the last quarter of 2022 to an average increase of 8.4% for the first quarter of 2023. A year ago, increases averaged more than 20%. The survey also showed that a third of respondents reported an increase in underwriting capacity for the line. “A consistent decline in the number of respondents reporting an increase in cyber claims since Q1 2022 suggests that carriers may have eased back on premium increases due to fewer losses. The decline in losses could ultimately be attributed to industry efforts promoting a more aggressive cyber risk management strategy for insureds,” said the CIAB. The CIAB said that increased carrier scrutiny and tighter terms for lines like commercial property and commercial auto were common themes in respondent comments. “Several respondents also reported that carriers put an increased focus on an account’s loss history, to the point that some accounts with higher loss frequency faced non-renewal; some respondents also indicated issues with capacity for historically troubled lines like commercial auto, property, umbrella, and cyber, and that carriers were limiting coverage or even leaving certain markets completely,” it said.

US P&C rates moderate but commercial property spikes

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