US property market stabilises but concern over casualty loss trends

There has been a noticeable stabilisation in the US property marketplace during Q1 2024, according to WTW. Its Insurance Marketplace Realities 2024 Spring update noted that property market rate conditions have eased as a result of increased competition. However, loss trends continue to outpace rate in most casualty product lines, leading to combined ratio pressure. Rate predictions for non-cat exposed property are -5% to +5% and for cat exposed property -5% to +10%. WTW said: “ Insurers began 2024 reluctant to support a flattening of renewal rates. As the sequential months of Q1 2024 have transpired, and an increasing number of incumbent insurers lose renewal lines due to an inflexible stance on rates, insurers are being forced to readjust their mindset to this more competitive market.” The broker added: “A familiar cycle of ‘what is achievable’ on renewals has re-emerged in the current property market environment. Traditionally, when property market conditions begin a more favourable trend, it starts with downward pressure on rates as the first achievable result. True to prior market trends, underwriting discipline has thus far been maintained on the more restrictive terms, coverages and deductibles that were achieved by insurers during the prior year’s hard market.” As for the casualty sector, WTW said it is similar to 2023 with a two-tiered market. WTW said it expects modest rate increases in primary general liability and single-to-low double-digit rate increases in automobile liability for low-risk clients. High-risk clients with large auto fleets or heavy product exposure are seeing higher rates. “Continued legal system abuse with a lack of tort reform is driving up the frequency of severity losses and legal expenses, impacting carrier financial performance and necessitating insurance premium rate hikes,” said WTW. Rate predictions for general liability are +2% to +8%. Medical cost inflation continues, but workers compensation rates are flat or negative for most clients to offset the rate needs in liability lines, WTW said. For umbrella/excess liability, it said that while the trend line appears stable, the frequency of severity continues to create pressure on rate and programme structure for insureds. Cyber is currently seeing flat primary and excess cyber renewals and in some instances even decreases, and capacity continues to be readily available, said WTW. “Premium stabilisation has continued into 2024. Increases, if any, are typically seen by those organisations that cannot demonstrate strong ransomware controls. Underwriting decisions are heavily influenced by the security controls a company has in place, in conjunction with pricing and attachment points. Competition is strong among markets and certain risks may receive multiple quotes. Incumbents are eager to retain business,” said the broker. It said it expects expect modest rate decreases for D&O to continue in the first half of 2024. “However, we foresee challenges obtaining decreases with incumbents, particularly on excess, where incumbents are likely to hold the line on continued rate deterioration,” said WTW. “In a softer rate environment, insurers may be willing to expand coverage rather than give back premium.” Finally, for terrorism and political violence, rate increases are tempering compared to late 2023, but insurers are still looking to rebalance their books to combat increased losses and treaty costs, the broker said, with insurers still reviewing coverage, with a focus on reducing non-physical damage business interruption and contingent exposure. Active assailant rates are generally unaffected by terrorism & political violence market dynamics but are increasing in response to the change in risk environment, albeit slower than in 2023, WTW said.

US property market stabilises but concern over casualty loss trends

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