US P&C rate growth slowed fractionally to 8.7% pace, with commercial property rates picking up: CIAB

Property and casualty insurance rate growth in the US slowed fractionally to an 8.7% percent pace in the fourth quarter, the 17th consecutive quarter of gains, with gains in all lines and runaway acceleration in cyber, a quarterly survey by the  Council of Insurance Agents & Brokers (CIAB) has shown.

Pricing for mid-cap accounts is advancing the strongest, up 10.6% in Q4, the second consecutive quarter of acceleration. Over the course of the past year, the pace of rate increases has come down most notably for large-cap clients, down by 4.5 percentage points to a 9.2% pace. Rate growth in the small-cap segment held a tight corridor of 6.2 to 6.3% throughout 2021.

Amongst major lines, commercial property helped lead rate growth in Q4 with its second consecutive quarter of acceleration to a 10.5% rate of growth, second only to the continued market-leading growth for umbrella policy rates. General liability continues to show steady growth above the 6% mark. Commercial auto has proven somewhat more volatile in a range between 6.9 and 9.0% over the course of 2021. Workers’ comp pulled back from a prior quarter decline to edge forward 0.3%.

Amongst alternative lines, cyber continues to stand out with further acceleration to 34.3%, up from 27.6% in Q3 and the first over-30% gain since the post 9/11 market hardening.

“Cyber continued to raise alarm bells across the industry,” Ken Crerar (pictured), president and CEO of The Council of Insurance Agents & Brokers, said. “The increase in premiums for that line continued unabated in Q4 2021, and the frequency and severity of Cyber claims continued to climb."

Respondents were said to have blamed the “dynamic and always evolving” nature of cyber risk, versus the comparatively predictable profile of natural catastrophe. The rising reliance on technology both broadens the risk profile and amplifies the risk, some said in explanation. Brokers still feel that many carriers are pricing below the visible risks.

Capacity in cyber has come down, a heady 76% of the panel claims. That ratio has held a range of 73 to 81% throughout 2021. Falling capacity ran head on into rising demand, visible to a full 92% of the survey panel. A rise in claims is visible to 81% of the panel, up slightly from the prior quarter sounding.

Restrictions on capacity had been coming down in other segments, including commercial property, before an uptick in Q4, the report shows.

Two other lines posted rate gains in excess of 10%:  D&O liability (13.0%) and employment practices (10.8%). Mark rates in construction up 6.8% where new demand is said to be increasingly visible, followed by a 6.4% rate of increase for flood and 6.0% for business interruption.

Did you get value from this story?  Sign up to our free daily newsletters and get stories like this sent straight to your inbox.