Casualty Premium Rate Growth Slows, But Increases Persist

By Don Talend March 06th, 2024

According to the Q4 2023 Property/Casualty Market Report from The Council of Insurance Agents & Brokers (CIAB), premiums increased overall for the 25th consecutive quarter. Although the growth rate of premiums slowed for the second straight quarter — 7.0% versus 8.1% in Q3 and 8.9% in Q2 — steady increases have defined the current long-term hard market.

Let’s explore three notable trends from the report and their impacts on policyholders.

Trend No. 1: Midsize Account Premiums Outpace Others

The accompanying table reveals that premiums for midsize accounts grew by the largest average percentage for the third straight quarter.

Average Commercial Insurance Policy Pricing Increase by Account Size

Source: CIAB

A significant number of the members in the group captives we support fit into this midsize account category. We’ve heard firsthand how frustrating this ongoing hard market is for these companies and understand their desire for increased cost stability. Our group captive model derives premiums primarily based on actuarial analysis, including each member’s most recent 5-year loss history rather than industry averages, state rates, overall portfolio performance, and several other factors. This empowers members to lower their premiums through effective risk management.

Trend No. 2: Premium Increases Continue to Impact Several Lines

Among various lines of property/casualty insurance, Commercial Property (11.8%) saw the highest average premium increase. Commercial Auto premiums increased by an average of 7.3% in Q4 (down from 8.8% in Q3), followed by Umbrella at 7.6% (up slightly from 7.4% in Q3), and General Liability at 3.8% (versus 4.2% in Q3).

Membership in a member-owned group captive insurance company can reduce insurance costs across multiple lines — most notably, Workers’ Compensation, General Liability, Auto Liability, and Auto Physical Damage — compared with conventional insurance. Download this infographic to learn how much members typically reduce their insurance costs after joining.

Trend No. 3: Attention to Policyholders’ Needs is Critical

The CIAB survey revealed data indicating the need for insurers to remain attentive to the concerns of policyholders who have been hit with steady premium increases during the current extended hard market. For example, 62% of surveyed brokers described hearing of rate fatigue from their clients. Although lower than the 70% logged the previous quarter, possibly due to the lower increases, that percentage still illustrates the impact of long-term rate growth on policyholders.

Concerns about premium costs dominated clients’ outlook. When asked for their top three concerns, “future premium increases” topped the list at 80%, compared with 89% in the previous quarter, and the second-biggest concern was “high current premium” at 73%, versus 80% in Q3 2023. Although these percentages declined slightly by quarter, they are another indication of long-term rate fatigue.

Group captive insurance can help alleviate these client concerns about insurance costs by providing member-companies the ability to:

  • Lower premiums: When group captive member-companies manage risk effectively and outperform loss projections, they can reduce their premiums over time.
  • Earn dividends: The captives return surplus underwriting dollars to the members — plus investment income — in the form of dividends.

To learn more about the current state of the commercial property and casualty market, you can access the full report on The CIAB’s website.

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