Property Rates Rise and the Cyber Market Improves: Q3 2022 Commercial Market Update

The third quarter is always pivotal in the insurance market because it is the peak of the Atlantic hurricane season. The number and severity of named storms, and if and where they make landfall, will impact property premiums for the remainder of the year and into the following year. The third quarter of 2022 was quiet until Hurricane Ian made landfall in Florida on September 28th. The hurricane was devastating both in terms of the cost to human life and property. Risk modeling company RMS is estimating the total insured losses to be in the $53 billion to $74 billion range.

Loss from Hurricane Ian will negatively affect property insurance rates. However, rate increases continue to slow in the casualty market and have started to slow in the cyber market. In addition, many directors and officers (D&O) insurance buyers will see rate decreases.

In this Q3 2022 Commercial Lines Insurance Market Update, we explain pricing trends in the D&O, property, casualty, cargo, and cyber segments, including the causes of premium changes. Read on for the key insights, or download the full report here:

D&O Insurance Prices Continue to be Competitive

D&O insurance pricing remains competitive, and most buyers can expect rate decreases. Although the severity of settled securities claims remains high, the number of filed securities class actions decreased in the last two years, and this trend appears to be continuing in 2022. The reduced number of filed securities class actions, coupled with several new insurance carriers in this space, has created a favorable market for D&O buyers, whether public or private companies.

Hurricane Ian Raises Property Insurance Rates

The decelerating rate trend we noticed in the property market in the first half of 2022 effectively ended with Hurricane Ian. Property insurance buyers can expect rates to head up again even if their portfolios don’t include Florida properties. Inflation was an issue that property insurers were grappling with throughout 2022, and non-hurricane catastrophes have been increasing in both frequency and severity. Non-hurricane catastrophes are events like wildfires, hailstorms, tornadoes, and floods. Reinsurance capacity is expected to be constrained in 2023, and that will impact rates for all property insurance buyers.

Expect Slower Rates of Increase in the Casualty Market

The casualty segment is largely unchanged from Q2 2022—general liability and auto rates continue to increase, albeit at a slower pace. Casualty buyers can continue to expect to pay more for their lead umbrella layers, but their overall excess liability spend may be less than in previous quarters due to more competition in the market. Workers’ compensation continues to be profitable, and most companies can expect a decrease in their costs for this coverage.

Competition Rises in the Cyber Market

We’re finally starting to see some improvement in the cyber market. Premiums are still increasing but at a slower rate, and we’re seeing more insurers competing on primary and lower excess layers. Underwriters continue to focus on security controls, and those companies that have invested in strong cyber security can expect to see the best renewal results.

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

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