Hard market eases into 18th quarter; rate growth slows across lines

US P&C premiums rose for the eighteenth consecutive quarter, but marked the sixth quarter of moderation since the hard market hit its frothy late-2020 peak, with even the stressed cyber segment offering select signs of reprieve, a quarterly survey of members at the  Council of Insurance Agents & Brokers (CIAB) has shown.

Mark average P&C premium growth at 6.6% in Q1, down from 8.7% recorded in the fourth quarter, with most lines slowing by at least two percentage points or more from the prior reading. All but two segments have now slipped into single digit rate growth.

Cyber remains highly problematic, but the market did offer its first quarter of slowing rate growth.

It's not much by way of relief for the sector with the industry's fastest growing rates, but the percentage of brokers noting rising demand did slip 3 percentage points (pps) to 89%. The percentage noting a rise in claims slipped 9 pps to 72%.

“Brokers continued to struggle with the cyber line of business,” survey authors wrote. “The theme of increased frequency and severity of cyber claims was again common in responses.”

Premium growth slowed to a 27.5% pace from a 34.3% peak in the prior survey, but remains the most volatile line. Some 46% of the survey panel still reported premium gain in excess of 30% and another 31% reported growth of between 20 and 30%.

“Respondents highlighted a tension between decreased capacity in the market and increased demand,” report authors said of still wobbly price discovery.

And that's not even counting the low-security clients that get shown the door before seeing a price tag.

“Carriers enforced strict underwriting requirements for cyber, with many requiring at least multifactor authentication before they would even provide a quote,” survey authors said of market moods. “Insureds without loss controls, or with insufficient loss controls, would often be outright denied at renewals.”

Commercial property is capturing broker attention well beyond what observed changes in claims or demand might merit. Brokers rather pointed to concerns about rising property valuations as inflation grips the landscape.

Premiums growth slid to an 8.6% pace after two quarters of relatively stability after falling from the mid/late 2020 peak. Over 43% of the panel still claims double-digit growth. The percentage of brokers witnessing rising demand slipped fractionally to 39%.

“The capacity may still be there but [carriers were] getting super picky about how they were using it,” authors quoted one broker as saying of pricing differentiation on the market.

Amongst remaining lines, umbrella policies have decelerated quickly, but held on to double digit rate growth in Q1, as claimed by some 55% of the panel.

Workers’ comp suffered a fractional 0.5% decrease in rates, albeit with caveat that “it is not yet clear” if a new trend is afoot given signs of “continued vigilance in pricing terms and conditions,” and that soft pricing was restricted to new business, not renewals.

Mark D&O rates up 7.8% year on year in the first quarter, down from 13.0% in Q4.  Demand is fading, witnessed by 34% of the panel versus 54$ as recently as Q4 2021. Some 43.5% of the panel still sees double digit gains.

By account size, large accounts have benefitted most from the recent easing of the hard market. Rate inflation had been hitting large accounts hardest as recently as Q3 2021, but the pace of rate increase since lost 4.2 percentage points to a 6.2% rate of growth in Q1. The decline in just Q1 proved most dramatic for mid-sized accounts at 3.3 percentage points, but growth is now highest amongst client segments at 7.3%.

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