Positive Trends in the Commercial Insurance Market: A Q4 2022 Update

Commercial lines insurance buyers encountered mostly positive trends at the end of 2022. Most segments experienced rate stabilization and, in the case of public D&O, large rate decreases. The exception to this generally positive story is the property market.

In this Q4 2022 Commercial Lines Insurance Market Update, we review property insurance rates as well as pricing trends in the casualty, cyber, cargo, and D&O segments, including the causes of premium changes. Read on for a summary of our key insights or download the full report below:

Positive Signs for D&O

Once again, we have primarily positive news to report for the D&O segment of the market. Rates are decreasing for all public companies, with the most dramatic decreases occurring for companies that have gone public recently. Private company D&O buyers did not experience the same steep increases as public D&O buyers over the last few years, but even they are receiving decreases in the D&O portion of their premium.

The public markets cooled significantly in 2022—IPO listings dropped to the lowest levels since 2016. However, securities class action severity remains high.

Casualty Market Continues to Stabilize

The casualty market continues to stabilize. Premium increases in many situations are the result of exposure increases, as opposed to rate increases.

Workers’ compensation is the most competitive and profitable line of coverage. Still, with wage and medical inflation impacting indemnity claims and potential frequency increases given the return to in-office work, rate decreases may begin to fade.

Organizations with large auto fleets, high-hazard products, or significant premises exposures are facing difficult umbrella renewals. Using buffer layers to increase attachments can help mitigate premium increases.

Cyber Market in Transition

At this time last year, we were warning our clients of rapidly increasing cyber premiums, mostly due to ransomware losses. Our cyber team now characterizes the cyber market as “transitional,” with stabilized pricing. Depending on the industry and risk profile, some buyers may expect some narrowing of coverage.

More carriers are now competing for primary and low excess placements. However, the technology sector remains a tougher class than other cyber risks due to concerns about systemic and widespread risks, worry about laid-off employees in the tech sector taking data, the increase in claims for violations of federal wiretapping and video privacy laws, and more.

Weather Events Pummel Property Insurance Rates

In contrast to the generally positive news about the other lines, the property market is experiencing increased costs attributable to rising reinsurance rates and retentions, which are being passed down to insureds. This, combined with a continued increase in the frequency and severity of events (such as Hurricane Ian in 2022), will cause rates to rise in 2023.

Relationships continue to play a key role in building trust and credibility with markets. We have found that in-person meetings and site visits are resulting in better renewal outcomes. 

For more insights into the insurance impact of the fourth quarter of 2022, download your copy of the Commercial Lines Insurance Market Update.

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