The latest Insurance Marketplace Realities report by WTW indicates that inflation is impacting commercial insurance rates. Most coverage lines are experiencing price increases, primarily in the single digits, with the property market remaining relatively hard.
Key insurance price predictions for 2024 across various sectors include:
A notable trend in commercial lines is the stabilisation of price increases. However, the aftermath of Hurricane Ian has led to substantial price increases and larger retentions for retail insurers, as property reinsurers made significant cuts to capacity. Retail insurers have had to restructure their property insurance portfolios, leading to reduced capacity and a challenging market for buyers.
Despite a relatively calm Atlantic hurricane season, the year 2023 saw over US$100 billion in insured property losses. A restructuring of reinsurance treaty retentions is underway, which could attract additional capital to the property insurance marketplace, potentially easing the market conditions in 2024.
Looking at 2024, casualty treaty reinsurers are weighing social inflation and rate adequacy in casualty lines. If investment and reinsurance capacity decrease in liability lines, the market may move towards harder conditions. Global conflicts and a slowing Chinese economy add to the economic uncertainties, though the property and casualty industry remains well-capitalised with US$970 billion in policyholder surplus and increasing investment yields.
In the financial lines sector, including cyber insurance, market stability is observed. The sector's resilience may depend on major claims or disruptions in the financial sector.
“As the reinsurance market continues to exert its influence over retail insurers and capital distribution, our clients may face more uncertainty in 2024 across both property and casualty product lines,” said Jon Drummond, North America head of broking for WTW. “The concept of a bifurcated market has become seemingly omnipresent, but this dynamic may grow to be even more prevalent across multiple lines of business and industries in the foreseeable future.”
In other recent developments, WTW has introduced A-Star, a new excess layer directors' & officers' insurance solution.
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