USI delves into the state of the P&C market heading into the mid-year

Latter half of 2024 presents challenges

USI delves into the state of the P&C market heading into the mid-year


By Kenneth Araullo

USI Insurance Services has released a mid-year update of its 2024 Commercial Property & Casualty Market Outlook, detailing recent insurance market changes and projecting trends for the remainder of the year.

In the property sector, large rate increases from 2023 have mostly leveled off. Rates are flat to up 10% for both natural catastrophe (CAT) and non-CAT property with minimal loss history and good risk quality. Reinsurance treaty renewals have returned to a more orderly process with more capacity available due to the favorable rate environment, lower losses from increased retentions on 2023 treaties, and healthy returns on capital.

USI noted that the reinsurance market is expected to stabilize, reaching a total reinsurance capital of $561 billion, slightly below the $570 billion high of 2021. This stability translates to a more predictable operating environment for the property insurance market.

In the casualty sector, the rate and pricing environment for workers’ compensation remains competitive in most US states. General/products liability presents challenges, but some industry segments are experiencing flat renewals. The criteria for compensable mental injury claims may broaden, potentially increasing their frequency, severity, and adjustments in workers’ compensation premiums.

Lawmakers are also considering over a dozen bills in 2024 to expand or introduce presumption laws for post-traumatic stress disorder (PTSD) as a compensable illness. The high medical costs associated with catastrophic injuries can lead to higher claim costs and premiums, prompting insurers to closely monitor this area.

As for the international segment, new capacity for reinsurers and increased competition from insurance companies have decreased rates compared to previous projections. The market will continue to impose coverage restrictions on all lines of business, focusing on foreign voluntary workers’ compensation, property, and cargo for regions involved in hostile actions or war.

Restrictions include declining new risks in the Democratic Republic of the Congo, Israel, Lebanon, Russia, Ukraine, Belarus, and Venezuela, as well as non-renewing smaller accounts in Israel. Medium to large accounts in Israel will be reviewed case by case, with potential adjustments in coverage.

Trends in the environmental, aviation, and professional risk sectors

In the environmental sector, forever chemicals remain a significant issue, increasing both product liability and pollution claims. Finding PFAS coverage in the marketplace will be more challenging for product exposure, including supply chain/distribution risks and site-specific risks.

USI noted that the International Organization for Standardization (ISO) has issued a PFAS exclusion in 2023, now applied to most commercial general liability (CGL) and umbrella policies. The environmental marketplace is expected to tighten PFAS coverage availability, particularly for product pollution liability.

As for aviation, USI highlighted that the market remains competitive, except for war liability. The second half of 2024 is expected to see continued competition among aviation underwriters, with multiple options and potential premium savings for insureds with loss-free accounts.

However, the war liability market will face challenges and rate increases for operators carrying liability limits above $50 million due to global war market losses and reinsurers limiting exposure to war perils. This trend will likely continue as conflicts in Ukraine and the Middle East persist.

Finally, for executive and professional risks, premiums continue to decrease, though at a slower pace, in most major lines of coverage, notably directors and officers (D&O) liability and cyber insurance. The rate of premium decreases may level off in the second half of 2024 if leading insurers adopt more disciplined approaches.

Recent notable bankruptcies could lead to an increase in D&O claims in the latter half of the year, and any significant financial deterioration of an insured could negatively impact their next renewal, it was stated.

What are your thoughts on this story? Please feel free to share your comments below.

Related Stories

Keep up with the latest news and events

Join our mailing list, it’s free!