Future Insurance Pricing — Two Reports

Willis Towers Watson says businesses picking up, or renewing, commercial property insurance are going to see rate increases continuing into 2024. The Insurance Marketplace Realities 2024 report notes that the increases will likely be single digits for all lines.

That’s one side of the coin. The other is casualty insurance. Willis Towers Watson expects that market to harden even more.

Some of the commercial sectors, however, will see serious rate increases. Some property, and auto, cyber risk and terrorism policies will be significantly higher. That reality will likely drive many to alternatives like captives and parametrics.

Jon Drummond is the head of broking, North America, WTW. He said these are some of the report’s predictions:

  • Rates for risks exposed to greater catastrophe risk will rise 10% to 25% in the next year
  • Non-catastrophe risks will stay flat at about 10%
  • Cyber rates are stabilizing and will jump 5% in some case and fall up to 5% in others
  • General liability rates will rise 1% to 4%
  • Umbrella coverage will see increases of 4% to 8%
  • Heavy auto, large fleet risks will see prices go up 10% to 15%
  • Excess liability rates are predicted to rise 2% to 7%
  • Heavy auto and large fleet excess liability rates will go up 10% or more
  • D&O for the top directors and officers will be flat to lower by 10%
  • Work comp rates will continue the drop to the floor and will fall 1% to 3%

“As the reinsurance market continues to exert its influence over retail insurers and capital distribution, our clients may face more uncertainty in 2024 across both property and casualty product lines,” Drummond said.

A bifurcated market may also be more prevalent across many limes of business and industries in the near future.

Swiss Re came to a similar conclusion but from a slightly different angle. It said profitability in the P&C sector will improve in 2024 and that improvement will last through 2025.

The company predicts that premium growth on a global scale will rise to 3.4% by the end of this year and will be 2.6% through 2024 and 2025. The improvements will come from good investment returns.

This year’s investment returns will end up at 3.3% and will go even higher to 3.7% in 2024 and 3.9% in 2025.

Claims always impact profitability and the Swiss Re report says “the impact of economic inflation on claims is forecast to ease further over the course of 2024 and 2025.” Better control over underwriting is helping to combat inflation issues and the higher claims costs from inflation.

Premium growth — in total — is expected to be about 2.2% for the next couple of years. That’s up from the 1.6% average for the last five years.

Source link: Business Insurance — https://bit.ly/410FSBX

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