US Insurance Market Rates

US property insurance rates decline on insurer competition

Property insurance rates declined 9%, driven by increased insurer competition and decreasing reinsurance costs.   

• Insurers typically offered coverage enhancements to clients, including higher limits, revised definitions, and lower deductibles, seeking to avoid concessions on rates.
• Underwriting scrutiny of submission data typically decreased, though the broader economic environment may renew insurer focus on valuations.
• Clients with high loss activity and submissions viewed as lower quality by insurers generally faced less favorable renewals, although the environment remained more positive than in previous years.
• Insurer appetite increased in warehousing, food and beverage, and technical risk sectors.
• As organizations evaluated insurance costs, many considered self-insurance, captives, or alternative risk transfer as long-term solutions.

Casualty rate increases driven by auto liability and jury verdicts

Casualty insurance rates increased 8%; excluding workers’ compensation, the increase was 12%.

• Workers’ compensation continued to be the primary casualty line of interest for most insurers for reasons including strong historical profitability and stable performance; however, concerns continued regarding increasing reserves and rising medical costs.
• Auto liability continued to pose challenges for insurers due to larger jury verdicts nationwide and rising repair costs.
• General liability rates remained relatively stable, with average increases of approximately 2%.
  • Loss activity in certain industry classes — including real estate, hospitality, and public entities — drove larger increases.
  • Coverage restrictions continued to increase, including per- and polyfluoroalkyl substances (PFAS) exclusions, biometric restrictions, and cyber exclusions, with real estate and hospitality organizations seeing additional exclusions related to sexual abuse, human trafficking, and assault.
• In the umbrella and excess liability market, risk-adjusted rates increased 16% compared to 15% in the prior quarter.
  • Rates for lead umbrella programs with favorable loss experience and low-hazard exposure trended higher by 12% to 15%.
  • Clients with adverse loss development typically experienced changes to limits, attachments, coverage, and/or pricing, with rate increases exceeding 30%.
  • Insurers continued to reduce limits; four London insurers closed down in 2024 and new capacity has been limited. Some high excess insurers raised the minimum price per million to $10,000, affecting umbrella and excess tower pricing.
  • Insurers shifted away from concentrating capacity on single towers due to increased frequency of severe claims.
  • Concerns increased regarding adverse outcomes seen as tied to third-party litigation funding in the US court system.
  • Frequency and severity of auto liability claims increased across all business classes and vehicle types. Some insurers raised auto attachment points for fleets over 100 units, especially in higher risk states. Third-party hauling contributed to adverse auto liability loss development.
  • General and product liability claims showed higher severity trends. Premises exposures are leading to large verdicts, adding pressure to pricing programs already strained by auto and product liability issues.
  • Certain insurers limited/excluded coverage for specific risks — such as PFAS and biometric data — increasing costs for clients.

Financial and professional lines rates continue to decline

Financial and professional lines rates decreased 3% for the fourth consecutive quarter.

• Directors and officers (D&O) liability rates declined 5%.
  • Pricing for D&O continued to stabilize, with single digit decreases in both primary and total program rates; the gap between primary and excess layer pricing narrowed.
  • Some insurers reduced participation in mid to high excess layers; some either opted out of renewals or reduced capacity. Drivers included heightened claims severity, rising litigation costs, and a more cautious underwriting approach.
• Fiduciary insurance rates declined 2%.
  • Insurers faced uncertainty due to lawsuits, particularly excessive fee litigation involving retirement plans, health plans, and pharmacy benefit managers (PBMs). Two notable cases could significantly impact the fiduciary insurance market.
  • Ongoing Employee Retirement Income Security Act (ERISA) 401(k) excessive fee litigation, along with increasing defense costs, settlements, and plaintiffs' fees, continued to drive insurer losses, particularly for improper investment claims.
  • Insurers typically sought minimum retentions of $1 million to $10 million for larger plans, amid rapidly increasing defense costs and expert fees.
  • Recent lawsuits regarding pension risk transfer and pension calculations prompted underwriters to renew their focus on defined benefit plans.
  • New entrants offered lower retentions and often sought to participate on the D&O program as well as writing fiduciary.
• Errors and omissions (E&O) rates were flat while financial institution (FI) rates decreased 1%.

Cyber rates decrease as capacity increases

Cyber insurance rates decreased 4%, the eighth consecutive quarter of reductions.

• Cyber insurance capacity increased, with several new insurers and additional facilities joining the market. A capacity shortage is not expected in the near term.
• Clients used premium savings to purchase higher limits, reduce retentions, shorten waiting periods, and broaden coverage.
• The frequency of cyber events and claim notifications in 2024 highlights the growing complexity of cyber risks, where a single point of failure can impact thousands of organizations.
• Generative AI continued to emerge as a concern, with its ability to amplify existing cyber risks, leading to potential consequences including business interruptions from AI system failures, wire transfer fraud from hyper-realistic deepfakes, and inadvertent copyright infringements.

Our rates reflect the segment mix of Marsh’s client portfolio.