Goldman Sachs anticipates a stable and orderly reinsurance renewal season in 2025, with property catastrophe pricing expected to decline by 5-15 percentage points at the January 1st renewals.
This prediction is based on insights from W.R. Berkley (WRB) and discussions with major insurance carriers. WRB, a property and casualty insurer, forecasts an average price decrease of around 5% for larger account business.
Conversations with other carriers indicate a consistent approach to reinsurance purchasing strategies, with no significant changes expected, according to analysts.
The commercial insurance market continues to demonstrate pricing discipline across various product lines, Goldman Sachs also noted.
They stated: “We gained incremental confidence in the outlook for commercial pricing trends as both HIG/WRB pointed to market discipline across product lines and insurers pressing on casualty increases to keep up with social inflation (litigation) trends. “
According to the analysis, while casualty lines lead in price increases, workers’ compensation and directors’ & officers’ (D&O) insurance exhibit more cautious pricing strategies.
Goldman Sach stated: “D&O insurance pricing levels in particular were noted to be unsustainable. The insurers view this environment as a time to focus on more disciplined underwriting in current product lines while exploring opportunities to expand underwriting capabilities through internal investments in technology.”
Analysts have also observed that carriers are incrementally more constructive on homeowners margins as the market goes into 2025.
After a period of substantial price hikes, insurers are expressing increased confidence in the profitability of homeowners’ insurance heading into 2025.
The Allstate Corporation (ALL) highlighted its successful track record in homeowners’ insurance and its plans to utilize profitable growth in this line to support expansion in the auto insurance sector.
Additionally, HIG noted that it was pleased with the status of its homeowners business with the exception of a few cat prone states, after reporting a 75% underlying combined ratio in 3Q24.
Despite ongoing challenges in catastrophe-prone states like California and Florida, industry sentiment towards homeowners’ insurance “seemed generally more constructive” into 2025.
