P&C rate growth picks up in Q3 to 8.9% pace, 16th quarter of gains

Property and casualty insurance rate growth accelerated slightly to an 8.9 percent pace, the 16th consecutive quarter of gains, contributing to further growth ambitions, a quarterly survey by the  Council of Insurance Agents & Brokers (CIAB) has shown.

Nearly 80 percent of survey respondents identified “driving organic growth” as their top priority in Q3 2021, while a "significantly" lower 48 percent would name that goal as a top-three challenge, according to the CIAB's Q3 Commercial Property / Casualty Market Index report.

Commercial property lines helped lead rate gains with growth at 10.3 percent, second only to the 16.9 percent growth for umbrella policies, even after umbrella's decline from a late 2020 peak.

Cyber rates continued to accelerate, with an average increase of 27.6 percent, a rise from Q2's 25.5 percent and Q1's 18.0 percent increase.

"Carriers continued to take a hard line on cyber risks in Q3 2021,” said Ken Crerar (pictured), chief executive officer of CIAB. Only "proactive" brokers and clients implementing stricter loss controls can hope for any "distinct advantage when it comes to finding robust, affordable cyber coverage."

Price drivers include "exponential" increases in frequency and severity of claims, due in part to the rise in remote work. Claims may have outstripped premiums for some carriers who sought growth early but are working hard to make up pricing ground.

D&O liability rates were up 13.6 and employment practice rates up 10.3 percent, the only other double-digit gains amongst remaining non-core lines.

Only workers' compensation lines slipped into fractional price declines, a break from five quarters of slight increases, the survey showed.

Rate growth is tilted towards large and medium sized accounts, up over 10 percent in the third quarter, well ahead of 6.2 percent growth for small accounts, a pattern that has remained stable over the past year.

Underwriting directions and capacity followed the pricing trends.

"Reported changes in underwriting were consistent with reported hard market conditions," authors said of survey results. Respondents claimed more disciplined underwriting, stricter loss controls, and more in-depth reviews of loss history, especially in Cyber.

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