Commercial insurance rate growth slips to 3.7% Q3; gives back Q2 surge
Commercial P&C insurance rate growth eased across a wide swathe of business lines in the third quarter, putting MarketScout's composite annual commercial rate growth measure down to 3.7% from 5% in Q2.
By client industry segment and by account size, every listed category saw some form of rate moderation.
The 1.3 point decline in the aggregate reading is the strongest downward move in recent history, encompassing all but three of the 15 listed business lines. The Q3 downward move more than corrected a Q2 rate surge for about half of the listed coverage classes.
“Reinsurers have been tough on insurance company partners the last twenty-four months,” Richard Kerr, CEO of Novatae Risk Group, offered by way of explanation in a comment for MarketScout.
“The enhanced terms are being passed along to insurers and their customers,” he said. “Higher interest rates also help support reinsurers' results, so that could be a part of the reason for moderating rates as well.”
Only business owners' policies saw accelerating rate growth in the period, adding 1.8 percentage points (pps) to a 5% rate of growth, a rough return to annual growth rates seen late 2022 after H1's brief let up.
Commercial property backed off from what had been somewhat stand-out rate acceleration to fall back into single digit growth rates.
Key liability lines are now seeing rate growth at mid-term lows. Professional liability has decelerated for a fourth consecutive quarter to nearly halve its rate of growth to 3.3%. D&O has slowed for all but one quarter in the past six to a 3% annual pace. Employment practices is likewise at a mid-term low growth pace of 2.0%, half the pace from a quarter prior and a third the pace seen as recently as Q4.
General liability has held up somewhat better, if a bit volatile in H1, and at 6.3% growth in Q3 remains within a range in place since at least 2022.
Rates in cyber continue to be the biggest mover, with Q3's annual growth rate of 8% down 5.3 points from Q2 and roughly half of the Q1 reading.
Among client industry segments, transport continues to suffer the highest rate gain, at 6% in Q3. Rate increases for habitational eased off notably from the Q2 surge.
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