Property-Casualty Premiums Rose for 23rd Consecutive Quarter in Q2

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August 21, 2023 |

Man in suit standing on gray floor in front of chalkboard wall with graph drawn in chalk and arrow pointing upward

Commercial property-casualty insurance prices increased 8.9 percent during the second quarter of this year, the 23rd consecutive quarter of premium increases, according to the Council of Insurance Agents & Brokers (CIAB) Commercial Property/Casualty Market Index Q2/2023.

The second-quarter premium increases were a slight increase from the 8.8 percent increase the CIAB's quarterly survey reported for the first quarter.

"Similar to last quarter, respondents reported that carriers often required additional detail on submissions during renewals, in particular when it came to lines like commercial property and commercial auto," the CIAB report says. "However, several respondents also mentioned that they believed carriers were also more willing to compete for accounts by pulling back on premium increases and lowering retentions."

Medium-sized accounts saw the largest second-quarter premium increases at 9.8 percent, though that was only slightly higher than the 9.7 percent increase experienced by large accounts, the CIAB said. Large accounts were a major focus of insurer competition, the CIAB survey found, with the average second-quarter premium increase down from an 11.4 percent increase during the first quarter. Small accounts saw a 7.2 percent increase.

Premium increases for most commercial property-casualty lines remained relatively stable during the second quarter, according to the CIAB. Most saw increases that were in line with those of the first quarter.

Premium increases for the various commercial lines remained relatively stable this quarter, with most showing increases roughly in line with the previous quarter, or slightly higher.

Commercial property was a notable outlier, experiencing the greatest increase among all lines during the second quarter at 18.3 percent, the CIAB found. Factors contributing to the size of the increase in commercial property premiums included natural catastrophe losses and rising property values, according to respondents to the CIAB's survey.

Reinsurance was a factor in property premium increases as well, the CIAB found, with respondents reporting difficulties placing property policies in the admitted market, especially for coastal properties, as well as nonrenewals of some accounts by some reinsurers.

The CIAB report suggests that US natural catastrophe losses likely further contributed to insurers pulling back on underwriting commercial property insurance. That was especially the case for coastal property, which one survey respondent said was now very difficult to insure in the standard markets, the CIAB says. Survey respondents also indicated that property deductibles continue to increase, while insurers are pushing increases in property values as a result of inflation.

The CIAB second-quarter survey found 80 percent of respondents reporting a decrease in commercial property capacity, with nearly half of those indicating the decrease was significant.

Another second-quarter outlier, in the opposite direction, was cyber insurance, the CIAB found. Cyber-insurance premiums rose 3.6 percent during the second quarter, down from an 8.4 percent increase in the first quarter in "the strongest sign of relief for the line seen so far," the CIAB report says.

The CIAB report suggests that one possible explanation for the continued easing of cyber premiums was additional competition in the cyber-insurance market. Survey respondents' reports of cyber-underwriting capacity spoke to insurers' increased willingness to write the line during the second quarter. The CIAB notes that in the second quarter of 2022, 14 percent of survey respondents reported an increase in cyber capacity versus 68 percent reporting a decrease, while in this year's second quarter 40 percent of survey respondents reported an increase in cyber capacity versus 18 percent reporting a decrease.

Commercial auto premiums increased 10.4 percent in the second quarter, up from an 8.3 percent increase in this year's first quarter, according to the CIAB. It was the 50th consecutive quarter of premium increases for the line. Meanwhile, workers compensation saw its 6th consecutive quarter of premium decreases, with premiums down 0.7 percent, following a 0.5 percent decrease in Q1, the CIAB said.

General liability premiums increased 5.2 percent in the second quarter, up from a 4.6 percent increase during the first quarter, while umbrella premiums increased 8.1 percent, down from an 8.5 percent increase during the first 3 months of this year.

The CIAB said survey respondents reported that high commercial insurance premiums and the prospect of future premium increases were top concerns for their clients. "Some reported that clients were 'rate fatigued,' leading to them purchasing lower limits or biting the bullet and increasing their deductibles to keep premiums down," the CIAB report says.

The CIAB also surveyed brokers about their priorities and challenges. "Three of the top priorities for respondents—'enhancing the customer experience,' 'adopting new technologies,' and 'becoming more data driven'—suggest that brokers recognize the relationship between technology and demonstrating value to their clients," the CIAB report says.

The CIAB said a key theme in responses regarding how agents and brokers could better address enhancing customer experience was by making use of better customer-facing technology.

Respondents also emphasized the importance of becoming more data-driven in their approaches to risk management, the report says. "Respondents noted that using platforms that aggregate data or adding capabilities to their existing agency management system that allow them to collect more and better data are essential to keeping clients up to speed, developing unique offerings, and informing risk management reduction strategies," the CIAB says.

By far the top challenge reported by respondents in the second-quarter survey was recruiting and developing talent, the CIAB says. It was cited as a top-three challenge by 86 percent of respondents, more than the 57 percent that identified driving organic growth as a top-three challenge.

August 21, 2023