The Council of Insurance Agents & Brokers (CIAB) released its Q3 2024 Property/Casualty Market Report in late November. The report indicates that premiums across all account sizes increased an average of 5.2% for all product lines, with medium-sized accounts experiencing the highest increase at an average of 5.6%.
Commercial property insurance rates increased by an average of 7.9%, down from 8.9% in Q2 to 10.1% in Q1 of this year. This deceleration in rate increases marks a shift in Commercial Property insurance towards stabilization. The Property insurance market, according to the CIAB, is in transition as insurance companies adapt to evolving risks. It’s important to keep in mind that certain classes of businesses and specific geographic areas face higher rates and more restrictive terms and conditions.
Behind the Slowdown of Rate Increases
Several factors are behind the slowdown in the pace of rate increases in the Property market. There is more capacity within shared and layered program structures, which creates greater competition. Strong insurer financial results and a stable global reinsurance market have meant expanded appetite and deployment of more capacity. Insurers have achieved rate adequacy after several years of significant increases and implemented a more measured underwriting approach to risk.
Additionally, property valuations for most clients appear to be in a better position after a push by carriers for adequate property valuations and insurance to value (ITV) in the last few years. While valuations remain a critical underwriting factor, many insureds have increased their values to a level where they should be based on the guidelines insurers have provided.
Despite the damage from this year’s hurricane season, S&P Global Ratings believes that “full-year 2024 losses from natural catastrophes for most insurers should remain within their budgeted expectations.” The rating agency said, “Given the structural changes in the reinsurance market since 2023 and the strategic actions reinsurers took during the renewals, we believe their potential losses from Hurricane Helene are manageable and absorbable within their earnings.” Reinsurer changes, for example, included increasing attachment points and tightening terms and conditions. “In addition, the reinsurance sector is bolstered by robust capitalization, supported by strong operating earnings in the first half of 2024, positioning it well to handle potential catastrophe claims,” according to S&P Global Ratings.
We’ll keep you posted on the Commercial Property market as we head into 2025.
About Seneca Insurance Companies
Seneca Insurance Companies are known for having a broad appetite for writing property risks. We offer admitted and non-admitted ISO-based policies, with catastrophe perils based on location and risk characteristics.
