Overall commercial property/casualty insurance premiums are expected to increase slightly to an average of 7% across all account sizes in the fourth quarter of 2023, continuing a trend that has now been in place for more than six years.
According to the Insurance Agents & Brokers Association's fourth-quarter market study, nearly all business segments saw smaller increases than the previous quarter, but the average 7% increase in the fourth quarter compared to 8.1% in the third quarter marked the 25th consecutive quarter of increases.
Respondents said there had been no significant change from the previous quarter, although some said they saw slightly more competition for larger accounts. Premiums for large accounts increased 6.1% on average, the lowest across all account sizes.
Growth across the major business lines (commercial auto, commercial property, general liability, umbrella and workers' compensation) averaged 5.7% in the fourth quarter, down from 7.1% in the third quarter. Commercial property growth was 11.8% in the fourth quarter, continuing a moderate trend through 2023. Growth rates were 20.4% in the first quarter, 18.3% in the second quarter and 17.1% in the third quarter.
Respondents cited reinsurance and natural catastrophe losses as reasons for the increase in commercial real estate. 64 percent of agents and brokers surveyed said their underwriting capacity has decreased. This marks the ninth consecutive quarter that more than half of respondents said their capacity has decreased.
“At this point, we've become desensitized to change and are inundated with articles and white papers explaining the why,” one survey respondent said. “My underwriters and I have effectively stopped discussing the why and are moving to individual account solutions at this point.”
D&O premiums in the third quarter of 2023 decreased for the first time since the first quarter of 2017. D&O premium growth was essentially flat at 0.1% in the fourth quarter of 2023. Cyber premium growth fell below 1% for the first time since the beginning of 2019, increasing 0.7%.
The council noted insureds' fee fatigue and frustration with demands from insurers: Though down from the 70% recorded in the third quarter, 62% of agents and brokers said their clients experienced fee fatigue in the fourth quarter, and 55% felt burdened by requests for information from insurers.
One respondent said customers try to improve their risk profile but “there are additional requirements the following year”, and some feel they are “chasing a never-ending system where they are forced to make improvements to get coverage but are hit financially in both the improvements and the premiums”.
Topics Trends Commercial Lines Business Insurance Pricing Trends
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