Single-digit rate hikes likely in 2024: Report
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Increased claims, inflation and higher reinsurance costs will likely drive further insurance rate increases next year, and most buyers should expect single-digit increases, similar to the rate hikes they saw this year, according to a report from Woodruff Sawyer & Co.
In its annual P&C Looking Ahead Guide released Tuesday, the San Francisco-based brokerage said the hardening market that began in 2018 peaked in 2020, but buyers have continued to see increases in most major lines.
Easing inflation and other factors, though, should eventually lead to more moderation in rates, the report said.
“The combination of decelerating inflation and higher investment portfolio yields will improve insurer results, which should result in more favorable premiums – but that will likely not materialize until later in 2024,” the report said.
The relatively mild 2023 hurricane season should also temper property reinsurance rate increases, so insurers will likely see profits on their books of property business, the report said.
Commercial auto insurers, though, continue to see increased claims because of higher court awards and settlements, and increased repair costs, so auto rates will likely rise 6% to 9% next year, the report stated.
Commercial general liability insurers also remain wary of rising litigation so rates will likely rise 3% to 8% next year, Woodruff Sawyer said.
In excess liability lines, insurers continue to see more losses penetrating umbrella layers, so rates will likely increase between 7% and 15% for large companies and 4% to 10% for small and mid-sized companies. On higher excess layers, more capacity has entered the market so rates will likely rise 4% to 10% for large accounts and 2% to 8% for small and mid-sized accounts.
Workers compensation remains the most consistent source of profit for liability insurers, so rates for that line of coverage will likely be in the range of down 0.5% to up 1%, the report stated.
