Sharp rise in commercial property rates forecast for certain exposures
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Woodruff Sawyer & Co. on Tuesday forecast commercial property rates could rise 30% or more for the most challenged exposures, but the most favorable risks could see flat renewals in 2023.
Casualty market movements are expected to be less severe although excess markets could be challenging as late-year Hurricane Ian losses dashed any hope of relief in property markets.
Accounts with heavy catastrophe exposure that have shown little risk improvement and an unfavorable loss history could see the largest property increases — 30% or more, The San Francisco-based brokerage said.
Those without catastrophe exposure but still displaying little risk improvement and unfavorable loss history could see increases of 15% or more.
Catastrophe-exposed risks that have shown improvement and a favorable loss history are forecast to see increases of 5% to 10%.
Those accounts with a favorable loss history with risk improvement and without catastrophe exposure could see an increase of 0% to 5% in 2023, Woodruff Sawyer said.
In casualty markets, commercial general liability is expected to see increases of 2% to 7%, while commercial auto markets are expected to see increases of 5% to 8%.
Umbrella and excess liability coverage was described as a “difficult environment.” Large companies with revenue of $1 billion or more could see rate increases of 6% to 15%, while middle-market and small companies are forecast to see rate increases of 4% to 10%.
The broker added that losses tied to Hurricane Ian have shifted earlier market forecasts.
“Before Hurricane Ian, there was some hope commercial property rates would stabilize, and, in some cases, insureds would obtain rate reductions. Post-Ian, that hope has all but disappeared” it said.
