According to a new Lockton Market Update report, while the US commercial insurance market remains generally stable and predictable for buyers, a sense of fragility persists as insurers and business leaders monitor natural catastrophes, rising social inflation, and an uncertain geopolitical landscape.
Lockton, the independent insurance broker, also highlights US economic conditions affecting insurers, trends in transaction liability insurance, and key considerations for businesses under the new presidential administration in its December quarterly update.
The report further notes that, despite insurers demonstrating strong earnings, the commercial market remains fragile. However, the property market remains competitive despite losses from natural catastrophes.
The report sheds light on how property market conditions are performing better than expected, despite accumulating losses from hurricanes and severe convective storms. However, results can vary significantly depending on individual buyers’ circumstances.
Workers’ compensation continues to be “a bright spot for insurers,” according to analysts at Lockton. However, concerns remain due to complex litigation threats and adverse reserve development for liability insurers. The directors and officers liability (D&O) market continues to decline, particularly for public companies. Meanwhile, the cyber market remains extremely favourable to buyers, though it shows potential signs of firming
While third-party liability remains a troubling outlier, ample capacity, greater competition, and strong reinsurance support are driving rates down for property, workers’ compensation, D&O, and cyber insurance.
Mark Moitoso, Risk Practices Leader, Lockton, commented, “2024 was another year of ups and downs and unexpected events, yet insurers’ earnings resiliency is generally strong. We witnessed significant weather volatility, continuing geopolitical tensions, and the election of a new US president. In this dynamic environment, business leaders need strong, actionable market intel to make informed decisions.
“With a strong US economy and a generally stable insurance market, fears of a recession or a return to a hard market have largely subsided. However, a major unexpected event could still disrupt market stability. The market is very focused on pricing, structure, and terms and conditions for third-party coverages. That is one of the most pressing narratives as we enter 2025,” explained Moitoso.
