In recent years, the property and casualty (P&C) insurance sector has experienced significant upheaval. Factors like inflation, supply chain disruptions, and natural disasters have impacted insurance claims costs. Then Hurricane Ian in 2022 was a 2-ton anvil that broke the proverbial camel’s back, resulting in property reinsurance drastically reduction in capacity (i.e. insurance dollars available), which led to a severe supply and demand constraint and therefore higher prices and much larger deductibles for retail insurers.
The good news is that we had a relatively calm Atlantic hurricane season with only 1 storm making landfall, and Idalia hit a fairly undeveloped part of Florida. Despite that, the property insurance market faced continued challenges throughout 2023, marked by continued inflation, Maui wildfires, and convective storms. The result was a year with over $100 billion in insured property losses.
Looking forward to 2024
The property market may see some good news with reinsurers poised to finally make profits in 2023, which could attract additional capital in 2024 and ease the supply constraints a bit. Do not confuse stability in supply with easing of pricing, though.
Casualty (aka Liability) reinsurers have expressed concerns about social inflation and rate adequacy in liability lines. This could lead to higher casualty rates in 2024 and beyond, which reflects our society’s litigious nature.
Predictions for 2024 indicate varying rate changes across casualty and property lines, with general liability, automobile liability, and umbrella liability expecting increases. Workers’ compensation rates may continue to decrease, and cyber insurance rates will vary with an emphasis on improved cybersecurity practices.
Here are some predictions for how Property rates will look in 2024:
- Coastal / Catastrophe-exposed property rates may increase by +10% to +25%.
- Non-catastrophe-exposed property rates are predicted to remain flat to +10%
Despite the shifting landscape, the industry is anticipated to remain stable in the near term. The property market may continue to navigate the hard market, while financial lines, particularly cyber insurance, offer a positive outlook in the evolving insurance marketplace.