Q4 commercial rate growth rebounds; property & auto lead: MarketScout

Commercial P&C insurance rate growth picked up across a wide range of business lines in the fourth quarter of 2023, recouping momentum lost in Q3 for several lines and putting a composite commercial rate growth measure up q/q to 5.6%, a quarterly pricing study by MarketScout indicated. 

The 1.9 percentage point (pps) uptick in the composite reading is the highest quarterly move in recent memory, but still just barely enough to overcome the prior month's much broader and sudden decline in rate momentum. 

For the final reading of 2023, MarketScout by the annual composite rate growth reading at 4.56%. By line, property and auto rates were up the most in 2023, at 9.33% and 7.33% respectively.

“Calendar year 2023 settled down a bit as compared to the last few years,” Richard Kerr, CEO of Novatae Risk Group, said in comment. 

Commercial property in Q4 continued to show the strongest rate growth amongst business lines at 8.3% in Q4, but that gave the line its second quarterly deceleration from the 10.7% peak in Q2. 

Commercial auto continues to follow as the second strongest business line, flat at 7.0% annual rate growth in Q4 and closer to its recent Q2 peak at 8%. 

General liability has been the major downward mover, losing momentum for three of the past four quarters from 7% in Q2 to 6.3% in Q3 and now 5.3% annual growth in Q4. 

Other liability lines brought a mixed bag of changes in Q4:  professional liability rate growth accelerated to 4.7% after a full year of uninterrupted quarterly deceleration, but D&O continued to slip, down 0.3 percentage points pps to 2.7% after a heftier 1.7 pps decline in Q3. Rates in workers compensation held flat year on year for another quarter. 

Rates for umbrella/excess policies rose 6.7% year on year in the fourth quarter, up from the Q3 dip and well within the mid-term range.

Cyber rate growth held at 8%, flat from the prior quarter's reading, the first sign of traction after four straight quarters of deceleration, MarketScout said of its data. 

By client industry, transportation remains the stand-out for rate growth. Average rates for the segment accelerated in Q4 to a 7.7% annual pace. Public sector, energy and service sector clients continue to enjoy below-average rate increases.

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