State of the Insurance Market Report

2024 Initial Outlook:
Private Client Insurance Services


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Market Updates

Personal insurance customers in the high-net-worth (HNW) segment are feeling the impact of systemic industry challenges. Carriers continue to take aggressive action to regain profitability after years of mounting losses, resulting in constricted capacity and increased rates and premiums. Historically attractive risk profiles are no longer immune to these sweeping actions, making insurance harder to come by for nearly everyone. This paradigm shift requires clients, advisors, and carriers to rethink their approach to protection.

Throughout 2023 and into 2024, factors reinforcing industrywide restrictions include:

  • Fire Approaching Homes in CaliforniaCatastrophe (CAT) events: According to The NOAA National Centers for Environmental Information (NCEI), the U.S. set a record in 2023 with 28 weather/climate-related disasters that each reached or exceeded $1 billion in costs. These events included 17 severe weather/hail events, 4 flooding events, 2 tornado outbreaks, 2 tropical cyclones, 1 wildfire event, 1 winter storm/cold wave event, and 1 drought/heat wave event. Geography is no longer a predictor of CAT events — New England floods, Texas freezes, and convective storms in the Midwest are major loss contributors. However, the most drastic changes in carrier capacity are in Florida, California, and Texas. In addition to the events themselves, natural disasters directly impact the availability and cost of building materials, fuel, and workers to rebuild and repair damaged property.
  • Non-CAT water damage losses: Water damage from burst pipes, toilets, washing machines, dishwashers, and other plumbed appliances have become some of the biggest loss drivers in the HNW market. Homeowners policies increasingly restrict coverage for properties experiencing repeated water damage losses and may require the installation of water monitoring and automatic shutoff devices as a condition of coverage availability.
  • Regulatory environment: Insurance regulators’ primary responsibility is to protect consumers. However, unintended consequences further complicate market conditions. Carriers that cannot obtain adequate rates to remain viable in a given market often restrict new business, making it challenging for property owners to access appropriate insurance protection or choice in the marketplace. Some carriers are refusing to write any new business in California as a result of the current regulatory environment.
  • Reinsurance: U.S. property catastrophe reinsurance rates went up significantly in 2023, with increases ranging from 25% to 50%. Higher reinsurance rates often have a domino effect, resulting in higher policy premiums. Clients in CAT-prone states such as California and Florida currently bear the brunt of extreme premium hikes, but the impact is increasingly felt countrywide.

2025 State of the Insurance Market: Initial Outlook and 2024 Wrap-Up

Coverage Considerations

All geographies are affected by shrinking capacity and rate increases. Premium increases are more pronounced for HNW and ultra-HNW individuals due to their locations and relative values. Those with significant wealth often live close to, or directly within, CAT zones.

The following coverage trends continue to affect the private client insurance segment:

  • Personal auto: According to the Insurance Research Council, the severity of personal auto claims has been climbing since 2020. Vehicle damage claims are increasingly more expensive due to inflation. Auto insurance rates are rising because of supply chain issues, cost of parts, and a shortage of skilled labor.
  • Excess and surplus (E&S): More personal lines business is moving to the surplus lines market, which has contributed to its strong double-digit growth. E&S, often the only solution for clients in CAT-prone areas, can benefit clients with bespoke solutions to address specific circumstances and risk tolerance.
Rate Forecast
Private Client Services – Property: UpArrow-01 +10% to +50%
Private Client Services – Excess Liability: UpArrow-01 +10% or more
Private Client Services – Personal Auto: UpArrow-01 +12% to +15%
Private Client Services – Marine/Yachts: UpArrow-01 0% to +10%
  • Personal umbrella: Large jury verdict payouts have increased over the past several years, resulting in higher excess liability claim costs. One of the core factors impacting excess liability is social inflation, which refers to the trend of rising insurance costs due to increased litigation. As payouts and settlements increase, insurance companies may raise rates to cover the cost of claims. This can make it more expensive to buy umbrella policies, regardless of personal claim history.
  • Cyber: More HNW individuals are purchasing personal cyber insurance policies to protect against growing threats ranging from cybertheft and identity theft to threats to reputational risk and physical safety. Ongoing family education and comprehensive risk management is equally critical to helping HNW individuals and families manage their cyber risks.
  • Yacht insurance: The market continues to restrict and remains vulnerable to increased hurricane activity. Capacity is limited in all geographies, especially Florida, Texas, the Gulf States, and California.
  • Fine Art: Fine Art underwriters require more frequent appraisals for the most generous valuation clauses. Even in some of the most difficult CAT-prone areas, there is usually a stand-alone Fine Art insurance solution.
  • Aviation: Aviation and aircraft insurance capacity is slowly returning with the addition of new insurers in 2023. However, appetite continues to be affected by the diverse nature of operations, as well as claims settlements.

Recommendations

Partner with a trusted insurance advisor to navigate the turbulent personal insurance landscape. It is important to work with an advisor who can provide proactive, preventive advice, access to relevant education, and effective solutions at all times of the year, not just during renewal periods or when a claim arises.

  • Schedule coverage reviews and discussions with your risk advisor to help you make more confident and informed decisions before undergoing major renovations or making significant new property purchases.
  • Invest in proactive mitigation measures, such as automated water shutoff devices, to lessen the likelihood and severity of plumbing leaks and water damage.
  • Consult with your insurance advisor before submitting a personal insurance claim with your carrier. In addition to offering immediate support, your advisor can help you understand potential implications on your broader insurance portfolio.
  • With the frequency, severity, and cost of flooding events expected to keep increasing, all homeowners should consider adding flood insurance coverage to their risk management program.
  • In a world of increasingly prevalent cybercrime, there’s no substitute for being informed, prepared, and protected. Consult with your private client insurance advisor to determine which personal cyber insurance solution and coverage limits are right for you.

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The contents of this report are for general informational purposes only and Risk Strategies Company makes no representation or warranty of any kind, express or implied, regarding the accuracy or completeness of any information contained herein. Any recommendations contained herein are intended to provide insight based on currently available information for consideration and should be vetted against applicable legal and business needs before application to a specific client.