Fourth Quarter 2022 Commercial Rates — Looks like the Rest of 2022

MarketScout has just released an analysis of commercial insurance rates for the fourth quarter of 2022. The firm says the composite rate jumped 5.1%. That’s down a small amount from the 5.28% rise in the third quarter.

The positive conclusion for 2022 means commercial rate increases have gone steadily up for six straight years.

The fourth quarter of 2022 for property insurance saw rates rise an average 9.3%. MarketScout founder and now CEO of Novatae Risk Group, Richard Kerr said properties that are exposed to potential catastrophes, are seeing hikes of 25% to 30%.

“On January 1, 2023, property cat reinsurance renewals were completed except incases of poor underwriting and continuous losses,” Kerr said. “Virtually everyone was assessed more restrictive terms and conditions. The trickle-down will have a notable effect on the profits of property MGAs and program managers due to lower base commissions.”

The biggest increase was seen in cyber insurance rates. They skyrocketed 20%.

Kerr isn’t sure the rate hikes are going to stay on the up side. He thinks the economy slowing down and interest rate hikes by the Fed could push a moderation in rate increases.

That happened in the 1980s.

“As insurers accounted for the increased income from interest rate payments on premiums paid, rates were adjusted downward,” Kerr said. “Arguably, an insurer could write at a 100% combined loss ratio because the interest they received on booked premiums was 12% to 20%. We are a long way from seeing interest rates at those levels, but even at 5% it will have a positive impact on the ROI of some insurers, possibly resulting in a moderation of rate increases.”

Here are the fourth quarter numbers by class:

  • Cyber: up 20%
  • Commercial property: rose 9.3%
  • Umbrella/excess: jumped 7.7%
  • Commercial auto: increased 7%
  • General liability: are up 6.7%
  • EPLI: rose 6.3%
  • D&O liability: increased 6%
  • Professional liability: leaped 5.3%
  • BOP: rose 5%
  • Business interruption: are up 3.7%
  • Inland marine: jumped 3.7%
  • Fiduciary: rose 2.3%
  • Crime: increased 2%
  • Surety: saw a 1.3% hike
  • Workers’ compensation: flat, 0%

Here are the numbers by account size:

  • Smaller accounts (up to $25,000): up 6%
  • Medium accounts ($25,001 to $250,000): rose 5.3%
  • Large accounts ($250,001 to $1 million): jumped 4%
  • Jumbo accounts (over $1 million): increased 5.6%

Source link: Insurance Business America —

Source link: Business Insurance —

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