Commercial Insurance Premiums Rise 5.1% in Q3

The commercial property & casualty (P&C) insurance market continued to show signs of stabilization in the third quarter of 2024, with premiums rising by an average of 5.1% across all lines of business and account sizes, according to the Council of Insurance Agents & Brokers’ Commercial Property/Casualty Market Index Q3/2024.

Within that average, the P&C market witnessed divergent premium increase across lines of business. Umbrella liability coverage saw significant upward pressure, fueled by social inflation, while competition in the directors and officers (D&O) market contributed to a downturn in premiums, according to the report, based on a survey of CIAB member firms.

The third quarter’s average 5.1% premium increase was marginally lower than the 5.2% increase observed in the previous quarter.

Medium-sized accounts bore the brunt of the increases, with Q3 premiums climbing by an average of 5.6%, up from 5.1% in Q2. This outpaced the overall market trend, indicating that mid-sized businesses faced more significant pricing pressures compared to their smaller and larger counterparts.

In contrast, small accounts enjoyed the most favorable conditions, with premiums rising by just 4.4% during the quarter, down from 5.0% the previous quarter. This lower increase can be attributed to heightened competition among insurance carriers vying for small business clients, the survey noted.

Umbrella Coverage Leads Premium Increases

Umbrella coverage emerged as the frontrunner in premium increases in the third quarter out of all commercial lines. With an average increase of 8.6% in Q3 2024, up from 7.2% in the previous quarter, umbrella premiums outpaced all other insurance lines.

The impact of social inflation on claims has played a crucial role in the umbrella coverage landscape, the CIAB noted. A recent analysis by Gen Re revealed a notable increase in both the frequency and severity of umbrella claims since 2020. The average increase in umbrella claim costs jumped to 9.3% between 2020 and 2022 from 3.4% between 2009 and 2019. Similarly, claim frequency rose to 7.3% from 5.3% during the same periods.

Workers’ Comp, Cyber, and D&O Premiums Buck the Trend

With the exception of umbrella, all lines of business saw lower increases in premiums in this quarter than in Q2 2024, the report noted. Commercial auto premiums increased 8.5%, down from 9.0% in Q2, while commercial property increases were 7.9%, down from 8.9%. General liability premium increases were 4.8%, down from 5.1%.

Three lines saw premiums decrease in the third quarter: Workers’ compensation (-1.4% vs. -2.2% in Q2), cyber (-1.5% vs. -1.7%), and directors and officers (D&O) liability insurance (-1.9% vs. -1.0%).

The decline in D&O insurance premiums can be attributed to increased carrier competition in the D&O market. The CIAB pointed to an influx of new capital and a more aggressive approach by carriers seeking new business as key factors driving this competitive landscape.

View the full report here. &