Commercial Insurance Market Rates Increased by 5.2%
Despite insurance premiums rising for a 27th consecutive quarter, the market is showing signs of softening. The Council of Insurance Agents & Brokers (CIAB) Q2 2024 Commercial Property/Casualty Market Report highlights valuable trends, premium changes and the growing role of technology in the industry. Here’s what business leaders need to know.
Slower Growth in Premium Increases
A key trend this quarter is the slowdown in premium increases. On average, premiums went up by 5.2% across all account sizes, down from 7.7% in Q1 2024. Medium-sized accounts saw the most significant slowdown with premium increases dropping from 8.5% in Q1 to 5.1% in Q2. This is favorable news for policyholders who have faced steep premiums, suggesting a more competitive market where carriers are eager to attract and keep clients, especially in the small business segment.
Mixed Signals Across Lines of Business
For the first time since 2019, premium increases across all lines of business remained below 10%, indicating the market is stabilizing. Key insights include:
- Commercial auto and commercial property continue to experience the highest premium increases at 9.0% and 8.9%, respectively.
- Workers’ compensation and cyber liability premiums have decreased by 2.2% and 1.7%, providing some relief in a tough market.
- Cyber insurance saw its first decrease since 2018, highlighting the impact of increased competition and capacity in the market.
- Directors and officers (D&O) and employment practices liability (EPL) insurance saw moderate decreases of 1% and 0.1%.
The Evolving Cyber Insurance Landscape
Cyber insurance, known for skyrocketing premiums, is now experiencing a shift. In Q2 2024, premiums dropped by an average 1.7% average, a sharp contrast to significant increases just two years ago. The decrease is primarily driven by new capital and increased competition among carriers, even as cyberthreats continue to grow. For example, ransomware incidents increased by 214% rise in Q4 2023. Despite these challenges, insurers are eager to gain market share in the cyber insurance sector. Now would be a suitable time for businesses to review their cyber insurance policies to ensure they have the right coverage while taking advantage of favorable rates
The Double-Edged Impact of Technology
Innovation continues to play a significant role in the insurance industry, with mixed reactions from brokers and carriers. On the positive side, advancements in AI and automation are making processes more efficient. For example, AI is being used to assess commercial properties by evaluating data like roof conditions. This could lead to more accurate underwriting and potentially lower premiums.
However, industry experts are concerned that relying on automated underwriting has reduced personalized service and the quality of risk assessments. Some businesses have experienced automatic premium increases and non-renewals without a thorough examination of their unique risks. Businesses should partner with their insurance advisor to navigate these challenges and ensure their coverage is tailored to their unique needs.
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We’re Here to Help Prepare for What’s Next
Staying informed about the evolving insurance market is crucial for businesses. Partnering with a trusted advisor can help you understand the latest trends and develop strategies to manage risks, optimize coverage, and protect your operations. If you have questions or need advice on how to address these changes, connect with a member of our team.