A new report from WTW says that recent trends suggest rate increases will continue, albeit at a ‘materially reduced’ rate.
The report, called the Spring 2023 Insurance Marketplace Realities Report says that commercial insurance rates are beginning to stabilise, steered by cyber and D&O.
Reduced rates, WTW said, are becoming increasingly available for low-hazard classes in addition to moderate-risk ones where the client has sustained meaningful pricing and structural overhauls in the past two years.
The firm went on to say that its experts predict lower percentage increases across most lines of commercial insurance.
It wrote: “The long curve – the larger trend – has begun to bend in a positive way for commercial insurance buyers, while macro-economic factors are forecasted to exert upward rate pressure into 2023. Factors including inflation, the Russia/Ukraine conflict, continued supply chain challenges, and a volatile interest-rate environment will collectively exert mounting pressure on commercial insurance rates throughout 2023.”
It added: “Many coverage lines have softened significantly, most notably cyber, which has swung from triple-digit rate increases down to flat to +25%. Casualty rates have come down to flat or single digit increases for liability, with rate decreases for workers compensation risks. Executive risks such as Directors & Officers (D&O) are undergoing rate decreases in many areas, with primary D&O increases no higher than +2.5%, a notable difference from the spring report, when increases were as high as 20% or more.”
The firm said that after inflation, the second noteworthy macro factor impacting rates is Hurricane Ian. Many experts estimate insured losses at more than $75bn, and while losses in personal lines are much heavier than commercial, the ultimate impact of Ian will not be known for some time, likely to initially affect the reinsurance market.
