U.S. commercial insurance rates maintain predictable trend; highlighted by aggregate rise of 6.3% for Q1’2024
According to WTW's latest Commercial Lines Insurance Pricing Survey (CLIPS), U.S. commercial insurance prices have maintained a steady upward trend, with an aggregate rise of 6.3% for Q1 2024. This consistency in price increases has been observed since the global pandemic. Key areas like Excess Umbrella Liability and Commercial Property have shown significant price hikes, whereas Cyber insurance has experienced price decreases in recent quarters. Directors & Officers Liability insurance has stabilized with low to mid-single digit decreases. Economic factors such as slowing inflation are influencing these rate variations.
- WTW's CLIPS data indicates a consistent 6.3% increase in commercial insurance rates for Q1 2024, reflecting price stability.
- Excess Umbrella Liability coverage has consistently shown double-digit quarterly price increases since early 2023.
- Commercial Property rates have maintained double-digit increases for the last five quarters, indicating robust market activity.
- The Directors & Officers Liability market has stabilized with low to mid-single digit decreases after a period of significant price drops.
- Cyber insurance has seen price decreases in recent quarters, moving into single-digit reductions, which may impact revenue streams from this segment.
- The overall insurance rate increases have slowed somewhat from the previous quarters, potentially indicating a maturing market environment.
Insights
The rise in U.S. commercial insurance prices highlighted in the CLIPS survey for Q1 2024 underscores a continued trend that is vital for investors to understand. The 6.3% average increase in commercial insurance rates, consistent with previous quarters, indicates a persistent upward pressure on operational costs for businesses relying on these policies. For investors, this can signal a potential increase in premium revenue for insurance companies, which might positively impact their
The distinct behavior in different segments like Excess Umbrella Liability and Commercial Property coverage suggests targeted areas of interest for investors. The robust price increases in Excess Umbrella Liability indicate high demand or claims activity, which might present a revenue boost but also imply higher risks and liabilities for insurers. Conversely, the stabilization in Cyber insurance rates and the softening of the D&O market suggest competitive pressures or reduced claim activity, reflecting a complex balance of risk management and market dynamics.
From a market research perspective, the consistent increase in commercial insurance prices reflects broader economic trends, including inflation and risk aversion. The differentiation in rate changes across various insurance segments suggests specific market behaviors and risk assessments. For instance, the significant price increases in Excess Umbrella Liability coverage likely indicate a heightened perception of risk among insurers, possibly due to increased litigation or significant claims history. This could potentially lead to higher premiums for policyholders who require substantial liability coverage.
The slowing down of price increases in the Cyber insurance market, moving to single-digit decreases, likely reflects improvements in cyber risk management practices and a stabilization of the market after a period of significant growth. Investors should note that this adjustment points to a maturing market where the initial high-risk premiums are balancing out with improved security measures and reduced claim frequencies. This trend could signify a shift towards cost-effective cyber risk management solutions, driving a more competitive and sustainable market in the long term.
NEW YORK, June 10, 2024 (GLOBE NEWSWIRE) -- According to WTW, a leading global advisory, broking and solutions company, U.S. commercial insurance prices have maintained a steady trend with respect to consistent, routine, price increases. Based upon the company’s Commercial Lines Insurance Pricing Survey (CLIPS) for the first quarter of 2024, quarterly price increases of approximately
The commercial lines insurance price change reported by carriers participating in the CLIPS study demonstrated an overall increase of
Drilling down into specific commercial coverage areas contributing to the aggregate quarterly rate result, some coverages stand out. For example, Excess Umbrella Liability coverage has shown significant price increases over the last few years. Throughout that time, the fourth quarter of 2022 indicated the lowest rate increase (single digits) when compared to the other quarters within that time window. From early 2023 to the present, this coverage area has jumped back up to double-digit quarterly price increases.
When considering Commercial Property rate activity, from the first quarter of 2021 through the fourth quarter of 2022, quarterly rate increases had slowed to single digits. However, since that time, rates have begun experiencing increases and remained at double-digit increases for the last five quarters.
In evaluating the cyber insurance market from the CLIPS survey data, Cyber, after having significant price increases from mid-2020 to the third quarter of 2022, has seen price decreases in the last few quarters with the most recent one moving into a single-digit price decrease. Since mid-2022, when the Directors & Officers Liability (D&O) market began shifting from hard to soft, the price decreases reached double-digit levels, while recent data shows that the D&O market has now stabilized with low to mid-single digit decreases.
As economic inflation begins to show signs of slowing down throughout the U.S. economy, its impact is contributing to the variations in commercial insurance rates for corporations.
“Rates continued to harden across many coverage lines in the first quarter of 2024, but have slowed somewhat from the previous quarter, with the exception of excess/umbrella liability, where we saw an acceleration of rate increases since the first quarter of 2023,” said Yi Jing, Senior Director, Insurance Consulting and Technology (ICT), WTW.
CLIPS is a retrospective look at historical changes in commercial property & casualty insurance (P&C) prices and claims cost inflation. A forward-looking analysis of commercial P&C trends, outlook, and rate predictions for the upcoming quarter can be found in WTW’s Insurance Marketplace Realities series (published twice per year, every spring and fall).
About CLIPS
CLIPS data are based on both new and renewal business figures obtained directly from carriers underwriting the business. CLIPS participants represent a cross-section of U.S. P&C insurers that includes many of the top 10 commercial lines companies and the top 25 insurance groups in the U.S. This survey compared prices charged on policies written during the third quarter of 2023 with the prices charged for the same coverage during the same quarter of 2022. For this most recent survey, 43 participating insurers representing approximately
About Insurance Consulting and Technology
WTW’s Insurance Consulting and Technology business serves the insurance industry with a powerful combination of advisory services and leading-edge technology. Our mission is to innovate and transform insurance, and we deliver solutions that help clients better select, finance, and manage risk and capital.
We work with clients of all sizes globally, including most of the world’s leading insurance groups. Over 1,000 client companies use our specialist insurance software on six continents. With over 1,700 colleagues in 35 markets, we continually strive to be a partner and employer of choice to the insurance industry.
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At WTW (NASDAQ: WTW), we provide data-driven, insight-led solutions in the areas of people, risk and capital. Leveraging the global view and local expertise of our colleagues serving 140 countries and markets, we help organizations sharpen their strategy, enhance organizational resilience, motivate their workforce and maximize performance. Working shoulder to shoulder with our clients, we uncover opportunities for sustainable success—and provide perspective that moves you.
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FAQ
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