The US commercial insurance sector saw a composite rate increase of 3.8% in Q3 2024, with property insurance up 5.7% and commercial auto and transportation risks experiencing the highest rise at 7.3%.
MarketScout notes that although insurers expected significant impacts from Hurricane Helene, much of the damage appears to be flood-related, with many policyholders opting not to purchase flood coverage.
However, industry losses are expected to reach over $10 billion, and the overall impact on insurers could have been far worse.
Hurricane Helene is projected to have a noteworthy impact on professional liability for insurance agents, as they may now face scrutiny over whether they offered flood insurance to clients and if they formally declined such coverage.
Richard Kerr, Chief Executive Officer, Novatae, commented, “As of this report, Hurricane Milton is on a direct trajectory toward Florida, with potential landfall predicted as a Category 3 or 4 storm. Depending on its strength and where it makes landfall, Milton could become one of the most significant insured property catastrophe events in recent years.”
A summary of Q3 2024 rates shows the highest rise in commercial auto which increased by 7.3%, followed closely by commercial property at 5.7%, while business interruption reported a rise of 5%.
Meanwhile, general liability and umbrella/excess both reported a rise of 4.3% whereas workers’ compensation remained flat. The lowest rate increases were reported in the segments of crime, EPLI, fiduciary, and surety which were all in the range of 1-2%
In personal lines, the composite rate increased by 6.75% for the quarter, showing a slight moderation compared to the previous quarter. However, the full impact of recent natural catastrophes, such as Hurricane Helene, is yet to be reflected. With Hurricane Milton approaching, further rate hikes are anticipated, according to MarketScout.
Kerr added, “We have always observed a microclimate environment in personal insurance pricing. As of this writing, Hurricane Milton is projected to come ashore near Tampa, Florida, as a strong Category 3 storm. Should this occur, the ramifications for Florida’s personal lines insurance market will be substantial. While these effects will have some influence on the national composite rate, Florida-specific rates will see considerably sharper increases.”
MarketScout warned that the current composite rate hike underscores the insurance industry’s resilience in responding to evolving risks but raises questions about future stability, particularly in regions prone to extreme weather events.
For Q3 2024 personal lines rates for homeowners under $1,000,000 value increased by 7%, homeowners over $1,000,000 increased by 8%. While automobile increased by 8.7% and personal articles by 4%.
The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout’s analysis of market conditions. These surveys help corroborate MarketScout’s actual findings, mathematically driven by new and renewal placements across the US, the company noted.
