US Insurance Market Pricing

US property insurance rates continue to increase

Property insurance rates increased by 11%; it was the twenty-fifth consecutive quarter in which rates rose. 

• Rate increases were driven by rising reinsurance and capital costs coupled with three years of strong demand, limited new capacity, and loss activity.
• Risks with limited natural catastrophe exposure and stable incumbent capacity typically experienced better results than did risks with losses and/or concentrations of assets in CAT zones, including the Gulf of Mexico, the Atlantic coast, and California.
• Underwriters scrutinized CAT deductibles, together with limitations of cover for non-physical damage, cyber, and communicable disease.
• Clients generally retained more risk through increased deductibles, or through alternative risk transfer including captives, parametric, or structured solutions.

Casualty market remains competitive

Casualty insurance rates increased 3%; excluding workers’ compensation, the increase was 5%.  

• Casualty markets remained competitive, particularly for workers’ compensation.
• Auto liability losses continued, with jury awards escalating.
• Excess liability rates increased 7%, compared to 4% in the prior quarter; insurers focused on large exposures.

D&O rates continue to decline

Financial and professional lines rates decreased 6%. 

• Directors and officers (D&O) liability insurance for publicly traded companies declined 8%; insurer competition remained strong.
  • The size of rate decline eased, especially for programs that had received large decreases previously.
  • Many insurers continue to evaluate their placement in excess towers, with some seeking to move out of higher layers.
• Fiduciary rates increased 2% as Employee Retirement Security Act (ERISA) 401k plan excessive fee litigation continued to drive losses.
  • New insurers  offered lower retentions, on some programs. 
• Errors and omissions (E&O) rates were flat. 
• Financial institutions (FIs) rates decreased 5%.

Cyber rates decline; ransomware attacks increase

Cyber insurance rates decreased 4% in the quarter. 

• Ransomware attacks increased in frequency, sophistication, and severity; evolving privacy regulations also led to increased claims.
• Capacity was available, especially for excess programs; managing general agents (MGAs) continued to bring new capacity into the market. 
• Catastrophic cyber risk is a significant concern for insurers and insureds; understanding and quantifying exposure to war and aggregated cyber incidents, together with the supply chain risks associated with each, is challenging, but essential.