State of the Insurance Market Report

Auto Liability

Many market conditions in auto remain unchanged in 2024. Rates continue to rise faster than overall inflation due to more frequent and costlier accidents. The key factors we identified previously are still driving the auto insurance market:

• Rising repair costs
• The ever-increasing cost of claims

A concern between 2020 and 2022 has now become a near crisis for certain companies looking to find standalone auto coverage in tougher states such as New York, California, and Georgia, and/or those with poor loss experience, bad driving, hiring, or motor vehicle records. For many businesses, it still makes more sense to package auto with more profitable lines to offset worsening auto loss ratios and spread the risk. We expect rates to rise between 5% to 25% based on industry and client loss experience, commitment to loss control, location, radius of operation, driver records, and other factors.

An emerging risk for clients who use third-party shippers is the exposure to contingent auto losses. Several high-profile companies have experienced substantial auto losses due to insufficient limits, poor driving records, or other allegations of negligence on the part of their hired shipper’s accident. The plaintiff’s bar is aggressively pursuing claims against all parties and causing reinsurers to address this risk via additional questions at renewal. Clients should be prepared to address contractual issues regarding their use of third-party shippers as part of their renewals going forward, making sure to obtain sufficient limits, additional insured status, and written agreements wherever possible.

Workers’ Compensation

Workers’ compensation remains profitable for most insurers, and we do not see any dramatic hardening on the horizon. However, there are suggestions that insurers are beginning to consider holding premiums firmer in 2025. Both medical inflation and wage gains contribute to higher workers’ compensation claims.

Additionally, the U.S. Bureau of Labor Statistics shows that after many years of declines, injury rates are trending up again. Despite, or perhaps owing to, an ongoing lack of political will in many states to increase base rates, or in fact, seeking to reduce them further, insurers are finding it harder to maintain profitability in this line. Smaller firms should continue to expect flat to nominal increases in their workers’ compensation premiums, while larger firms with loss sensitive programs can expect 2% to 5% increases. Competition remains strong as insurers seek to balance their books by growing their workers’ compensation book. We will continue to monitor this important line for subtle and larger changes in 2025.

General Liability and Umbrella

Many insurers face a meaningful change to their books of business as liability premiums and losses rise relative to workers’ compensation. Insurers are therefore less likely to be able to accurately predict their results through traditional actuarial methods, given the unpredictability and frequency of larger liability claims and settlements. Improved underwriting results in 2022 and 2023 have so far continued in 2024. This has allowed for a general easing of price increases for many clients in a variety of industries. Those clients operating in industries with higher perceived liability exposures are still finding the market less willing to ease on rate increases.