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Digital EditionGlobal Commercial Insurance Rates Decline 1% in Q3 2024, but US Rates Up 3%
While global commercial insurance rates experienced a 1% average decline in the third quarter of 2024, U.S. commercial insurance buyers were not as lucky, experiencing a 3% average increase in rates during the quarter, according to the Marsh Global Insurance Market Index.
The decrease in the global composite rate — the first after seven years of consistent increases — was largely driven by increased competition in the global property market, with property insurance rates showing the most movement among major product lines compared to the prior quarter, Marsh noted.
While U.S. property rates also experienced a decrease in 3Q, the overall trend upward in U.S. commercial rates was primarily fueled by higher casualty rates, which increased 10% on average, the report stated.
Globally, rate changes varied significantly across regions during the quarter. The UK and the Pacific regions experienced the largest decreases at 5% and 6%, respectively, while the U.S. and the Latin America and Caribbean region saw the highest increases, both at 3%.
“In the third quarter, for the first time in seven years, we saw a decline in the global composite rate, with three of the four major product lines experiencing a decrease, which is a positive development for our clients,” stated Pat Donnelly, president of Marsh Specialty and Global Placement. “We are watching the markets closely for any impacts from the recent devastating storms during the North American hurricane season,” he added.
Looking at the product line trends in Q3 2024, property rates declined by 2% globally, while casualty rates increased 6% globally, remaining relatively consistent regionally except for a significant 10% increase in the U.S. market, according to Marsh. Financial and professional lines rates decreased 7% globally, and cyber insurance rates declined 6% globally.
U.S. Insurance Rates Deep Dive
Overall U.S. insurance rates increased 3% on average in the third quarter of 2024, up from a 1% average increase in the second quarter but relatively level with U.S. rating trends since the fourth quarter of 2022, Marsh’s data shows.
U.S. commercial property rates fell 1% on average in the quarter, a notable contrast to the 2% gain in the second quarter, an 8% average increase in the first quarter, and the double-digit increases seen throughout 2023.
This shift was driven by increased property insurance capacity across industry segments and all layers within shared and layered program structures, leading to heightened competition, Marsh noted. Strong financial results for insurers and stability in the reinsurance market also contributed to increased insurer risk appetite and capacity deployment in the U.S. property sector.
On the other hand, U.S. casualty rates surged by 10% on average, reaching their highest point since a 9% average increase in the fourth quarter of 2020. This increase was more than double the 4% average rate increase observed in the first and second quarters of 2024.
Notably, if workers’ compensation is excluded, the average increase in U.S. casualty rates would be even higher at 14% in 3Q. The primary drivers behind the rising U.S. commercial casualty rates were large jury verdicts and escalating repair expenses.
U.S. financial and professional liability lines declined 3% on average, consistent with the second quarter, but the pace of decreases continues to narrow compared to late 2022 and early 2023, when average rates were 10% lower.
U.S. cyber insurance rates decreased 4% in the third quarter, marking the sixth consecutive quarter of declines. Approximately 20% of clients took advantage of the lower pricing to purchase additional limits this year, according to the Marsh report.
The report also noted that more non-cyber policies contained exclusions for loss arising out of a cyber event, generally known as “silent cyber,” which led to increased focus on potential coverage gaps for property damage and bodily injury caused by a cyber event, as well as coverage solutions available to address these gaps.
Other Regional Insurance Rate Trends
Rate changes varied significantly across different regions.
The Pacific region experienced the largest composite rate decrease at 6%, followed closely by the UK with a 5% decline in the third quarter. Insurance rates in Asia and Canada also saw notable decreases, at 4% and 3%, respectively.
In contrast, the Latin America and Caribbean region witnessed a 3% increase in insurance rates, the highest alongside the U.S. Europe remained relatively stable, with flat insurance rates in the third quarter.
The India, Middle East, and Africa (IMEA) region saw a more moderate decrease in insurance rates, declining by 2% on average during the quarter.
These regional variations in insurance rate trends highlight the diverse market conditions and factors influencing the insurance industry across the globe. While some regions are experiencing significant rate decreases, others are still grappling with rising rates or maintaining a stable market.
View the global report here, and the U.S. market report here. &
