U.S. commercial insurance prices continued their ascent in the first quarter of 2024, increasing by 6.3% compared to the fourth quarter of 2023, according to a survey conducted by WTW.
The WTW Commercial Lines Insurance Pricing Survey (CLIPS) aims to highlight the main trends, challenges, and opportunities within the commercial insurance sector. However, the comprehensive results of the survey are exclusively available to participants.
“Rates continued to harden across many coverage lines in the first quarter of 2024, but the rate of increase has slowed somewhat compared to the previous quarter, except for excess/umbrella liability, which saw an accelerated increase since the first quarter of 2023,” said Yi Jing, senior director of Insurance Consulting and Technology (ICT) at WTW.
Commercial Insurance Price Trends
The commercial property and casualty (P&C) insurance market has seen notable price fluctuations in recent years, WTW reported.
For instance, the overall commercial pricing change soared to nearly 10% from the second to the fourth quarter of 2020, signaling a tough market for buyers. Prices then decreased to just below 5% by the fourth quarter of 2022. However, this decline was short-lived, with prices rebounding to above 5% in the first quarter of 2023 and continuing to rise through the end of 2023 and into the first quarter of 2024, exceeding 6%.
These recent increases indicate that businesses will continue to face upward pricing pressure when seeking commercial insurance coverage, WTW noted.
Price Trends by Line of Business
In the first quarter of 2024, most lines of commercial insurance experienced moderate to significant price increases. However, workers’ compensation saw slight price reductions, and directors’ and officers’ (D&O) liability prices decreased again, although at a slower pace than in the previous quarter.
Excess/umbrella liability led the way with double-digit price increases for the 20th consecutive quarter. Commercial property also saw double-digit price increases, albeit slightly lower than in the previous quarter. Similarly, commercial auto liability experienced double-digit increases, though these were also lower than in the prior quarter.
Cyber insurance rates, which had significantly increased from 2021 through the third quarter of 2022, started to decrease substantially from the first quarter of 2023 through the first quarter of 2024. However, the rate of decrease for cyber insurance slowed in the most recent quarter.
Specialty lines showed essentially flat rate changes. This balance resulted from rate increases in professional liability and employment practice liability being offset by decreases in D&O liability. These mixed results indicate varying pricing trends across different specialty lines, with some areas experiencing upward pressure while others see a decline in rates, WTW explained.
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