US property will hold double-digit rate growth H1 with big cat upside

Commercial property insurance rates are headed for further double-digit gain through the first half, while cyber rates top off as capacity seeps in and mild overall gain in casualty masks some divergent performance for key lines, a key US insurance broker is telling clients.

In property, loss-affected cat-exposed programs should continue to offer the most drama, with rate increases stretching from 25 to 150%, Brown & Brown analysts wrote. That leads to expected of gains of 15 to 50% for loss-free cat properties and the more mundane 5 to 10% gains for non-cat loss-free programs.

“Reinsurance outcomes are driving underwriting and are impacting policyholders,” authors say of a market said to be defined by continued tightening in capacity and moves to increased deductibles and minimum premiums.

Cyber rates are topping off with “with flat renewals and rate reductions becoming common” for the security-wise as capacity seeps into the market to boost limits, authors said.

Ransomware events ticked up in Q1 2023 after a respite throughout 2022 and “should ransomware claims continue to increase in frequency through Q2, there is potential for rates to trend upward.”

Most insureds are likely to see a 10% decrease to a 10% increase on primary layers with rate cuts for excess lines cutting costs on layered programmes, authors claimed.

But cyber insureds may struggle to patch together complete programs as carriers of property or business interruption seek to exclude cyber-originated events, Brown & Brown warned.

Casualty/liability lines are generally under less upward rate pressure with “minimal” single digit rate increases overall and “no signs of change” to carrier appetite.

But pockets of hardening remain. The umbrella/excess liability market still sees hikes as high as 25%, with limits come down as carriers reduce lead capacity. Policies with heavy auto exposures are particularly susceptible after a period of heightened severity.

Elsewhere, workers comp rates continue in their seven-year holding pattern and D&O insureds continue to benefit from the lingering capacity surplus left by a low-demand market.

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