US P&C premium accelerates again Q3; commercial property in focus

US P&C premium growth accelerated yet again in the third quarter, the twentieth straight quarter of rate growth and the second consecutive quarter of rate acceleration to tame the 2021 moderation, a quarterly survey of members at the  Council of Insurance Agents & Brokers (CIAB) has shown.

Mark average P&C premium growth at 8.1% in Q3 across the full spectrum of account sizes, up from a 7.1% in Q2 and 6.6% in Q1.

“In Q3 2022, brokers faced overall trends of tight underwriting and increased scrutiny, as well as reduced carrier appetite,” authors wrote. “Prices increased once again this quarter, though respondents often highlighted the increases were relatively slight, describing them as ‘close to flat’.”

Growth is strongest and accelerating fastest for mid-sized accounts, now at 9.0% in Q3 after having dipped to a 7.3% rate for Q1 and Q2 from double-digit rates late 2021. Large accounts continue to accelerate, to 8.8% in Q3 from 7.5% in Q2 and 6.2% in Q1.

Average premium gain for major lines of business came to 7.0%, also the second consecutive quarter of acceleration after 6.1% growth in Q2 and 5.7% in Q1.

Property & umbrella coverage lead. “Natural catastrophes and inflation exerted upward pressure on property premiums,” authors wrote of a 2.9 percentage point acceleration in Q3 to 11.2% growth for commercial property.

Inflation may be slowing in Q3, but its impact on property rates is rising.

“While some brokers last quarter were reluctant to say definitively whether inflation had an effect on commercial lines, this quarter 95% of brokers agreed inflation was influencing market trends, especially surrounding commercial property,” authors wrote.

Cyber leads rate growth again in Q3 at just over 20%, but is now well off the Q4 2021 peak growth rate and moving fast from the 26.8% reported Q2.

Despite the near continuous take-down from the 34% rate of growth in Q4 2021, “it is not clear” if carrier & broker efforts to bring stricter risk discipline have yet succeeded, authors note.

Some survey respondents cite “signs of relief,” others reported “difficulties with the line” with continued moves towards higher deductibles and lower sublimits. 78% of brokers still claim to see rising demand, down from 85% in Q2, but still 2-3 times the proportion seeing rising demand in other lines.

General liability rate remains mid-single digit, but is now up for the second consecutive quarter, this time up a point to 5.7%. Workers’ comp suffered a third consecutive quarter of rate decline, but cut the loss to a 0.7% pace.

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