State of the Insurance Market Report

Certain segments, including accounts with poor loss history and/or poor risk quality, can still expect challenging renewals. Frame and catastrophe (CAT) exposed habitational accounts face an uphill battle, although the volatility in rates has moderated compared to 2023.

Note that the general improvement in market conditions is set against the backdrop of the 2024 hurricane season which was predicted to be the most active in history. National Oceanic and Atmospheric Administration (NOAA) predicted as many as 25 named storms, 13 hurricanes, and seven major hurricanes (CAT 3 or higher). Along with the increasingly active hurricane season, the rise of severe convective storms (SCS) is also a key driver of property losses. This combination may lead to a deterioration in market conditions as we enter the latter half of 2024 and move into 2025. At a minimum, we expect insurers to continue to push for percentage deductibles for SCS, regardless of an account’s specific geographic footprint.

The specific impact of Hurricane Helene on overall market conditions is expected to be limited. Initial insured loss estimates in the commercial property insurance market range from $5B to $15B with primary insurers expected to bear the majority of the costs from the storm. Unless reinsurers are materially impacted, we do not expect this event to have an adverse effect on overall market conditions.

In addition to hurricanes and SCS events, wildfire continues to be a major issue in the western U.S. Admitted markets have mostly shed accounts with these exposures, causing reliance on the excess and surplus lines (E&S) market. However, even the E&S markets are taking an extremely cautious approach as reflected in pricing and line size. Parametric insurance is another alternative to traditional insurance, providing rapid financial relief based on predefined triggers. For property owners, leveraging parametric insurance can enhance risk management strategies and ensure faster recovery from adverse events.

In the first half of 2024, we saw rates level off with rate increases in the +3% to +7% range and some accounts achieving rate decreases. These positive outcomes are typically driven by:

• Good risk quality
• Favorable loss experience
• Adequate property and business interruption (BI) values

The following factors continue to affect the property market:

• Severe convective storms continue to lead the market in aggregate losses, ahead of hurricanes. This has led insurers to push for percentage deductibles. In areas considered to be high hazard, insurers may look to impose sublimits for these perils.
• Insurers remain focused on adequate insurance-to-value (ITV).
• New underwriting criteria is trending: Insurers in certain regions are now including crime scores in their decision-making process.