In the third quarter of 2023, commercial insurance rates in the United States saw a moderation in their upward trajectory, according to a report by MarketScout.
The data showed that rates increased by 3.72% during this period, a notable deceleration compared to the 5% surge witnessed in the second quarter of the same year.
One significant exception to this trend was Business Owners Policies (BOP), which saw rates increase from a previous 3.2% to 5% during the third quarter.
However, across various industry groups and account sizes, all categories experienced rate moderation, reflecting a positive trend for businesses and insurers alike.
Richard Kerr, CEO of Novatae Risk Group, suggested that reinsurers, who have exerted pressure on insurance company partners over the past two years, are now showing a more accommodating stance.
The improved terms negotiated with reinsurers are being passed on to insurers and their customers. Additionally, the presence of higher interest rates is supporting reinsurers’ results, potentially contributing to the moderation in rates.
However, it’s worth noting that some property underwriters remain concerned about the effects of global warming, with the record-breaking heat experienced in the summer of 2023 reinforcing these concerns.
As a result, there is still a belief among some in the industry that rates should continue to increase in certain areas, particularly within the realm of commercial property insurance.
In the third quarter of 2023, the commercial insurance landscape exhibited a mixed bag of rate changes across various coverage classes in the United States. Notably, Commercial Property insurance saw a significant uptick with rates rising by 9%. Business Interruption and Business Owners Policies (BOP) both experienced a 5% increase.
General Liability showed a substantial rise of 6.3%, Commercial Auto insurance saw a notable 7% surge, while Workers’ Compensation rates remained flat at 0%.
Meanwhile, Professional Liability and Directors and Officers (D&O) Liability increased by 3.3%, emphasising the significance of professional and executive liability coverage. Employment Practices Liability Insurance (EPLI), Fiduciary, Crime, and Surety all saw more modest increases of 2%, 1%, 1%, and 1%, respectively,
