Insurance Daily News

Commercial Property Insurance Rate Declines Stabilize

The third quarter saw a stabilization in commercial property insurance pricing, according to a report released Thursday by The Baldwin Group. Data indicates that property insurance rates decreased by 8% during the period, a slight improvement over the 8.1% drop recorded in the second quarter. This shift represents the sixth straight quarter of falling prices, though it is the first instance where the rate of decline has not accelerated.

Market dynamics remain bifurcated based on risk profiles. Properties that are well-maintained and free of prior losses are attracting significant competition among insurers. Conversely, risks associated with wildfires, catastrophe exposure, or previous losses continue to face rigorous underwriting scrutiny. For buyers utilizing shared and layered property programs, the current environment offers opportunities to secure broader coverage terms, negotiate better deductibles, and restore limits.

While property rates are softening, the casualty insurance sector is experiencing different pressures. Litigation costs and the severity of claims continue to impact insurers, leading to varied pricing trends across primary lines. General liability saw a 3.5% increase, down from 4.5% in the previous quarter. Meanwhile, umbrella pricing rose by 5.6%, an increase from the second quarter’s 5%. Commercial auto pricing grew by 2.9%, marking its smallest increase since 2021. Notably, cyber insurance saw a 2% price hike, the largest quarterly jump since early 2023.

Context/Analysis: The leveling off of property rate declines suggests the market may be approaching a pricing floor, though late-season storm activity remains a critical variable for the fourth quarter. For businesses, this environment signals a potential transition from a period of aggressive cost-cutting to one of more nuanced risk management, particularly as casualty lines like cyber and umbrella coverage show persistent upward volatility.

Why it matters

This report highlights a shifting insurance landscape where property rate relief is stabilizing, yet casualty risks like cyber and umbrella coverage remain subject to upward pricing pressure.

FAQ

How did commercial property insurance rates change in the third quarter?
Rates declined by 8%, which was a slightly smaller decrease compared to the 8.1% decline seen in the second quarter.

Which types of properties are seeing the most competition?
Competition is strongest for properties that are well-maintained and have no history of losses.

What is the trend for cyber insurance pricing?
Cyber insurance pricing increased by 2% in the third quarter, which is the largest quarterly increase observed since early 2023.

Source: Business Insurance. See the original source for full details.