As businesses grapple with unpredictable economic conditions, insurance premium rates will provide some relief, remaining steady through year’s end. For lines of business dealing with more complex risk such as auto, general liability, and property, an average increase of 6.9% still hit the middle market across the U.S. in Q3.
With HUB’s Q3 Rate Report predicting stable rates heading into 2025, businesses across the risk spectrum will have a window of opportunity to tighten their risk management strategies, review coverage gaps, and evaluate disaster preparedness strategies. Many businesses are looking to minimize the effects of the real potential for business interruption, as the looming threat of natural disasters, cyberattacks, and geopolitical events continues to present significant challenges. Alternative coverages like captives and parametric solutions will help businesses do this, as well, as premiums push higher in catastrophe-prone regions next year.
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Navigating a stabilizing market
Planning will help companies strengthen their risk management strategies and secure more favorable terms. Here’s how to stay ahead:
- Refine your current risk management plan. Leverage this period of stability to thoroughly review your risk management program. Ensure your insurance strategy adequately covers exposure, including catastrophe risks. Your broker can offer the insights and support needed to enhance your preparedness for both current and future challenges.
- Stay informed on market trends. Staying updated on rate trends across different lines will empower you to make informed decisions. Engage your broker to prioritize risks and develop strategies that align with the latest market shifts, ensuring that you remain competitive.
- Evaluate your insurers. Recent insurer collapses in catastrophe-prone states such as California and Florida have left policyholders vulnerable. Work with your broker to identify top-rated carriers that provide reliable coverage, not just the cheapest option.
Industry rate outlook for 2024
Despite the stabilization of commercial insurance rates, key industries continue to face varying challenges. Below is a summary of the projected rate changes as of Q3 2024, along with the main drivers behind them:
Construction: Flat to +10%
There has been some relief in builder’s risk coverage since Q1, but an active hurricane season could quickly reverse this trend, creating a more difficult insurance environment in catastrophe-prone regions.
Healthcare: Flat to +10%
Rates are stable overall, although nuclear verdicts and rising claims costs may drive rates higher for certain clients.
Transportation: +7% to 12%
Rates continue to rise, especially for high-risk operations, as high as 25%. Strong safety records may mitigate increases.
Commercial Automobile (1-5 Vehicles): +5% to 10%
Rates are stabilizing for smaller fleets, but businesses with severe losses could face steeper increases. Improving industry competition could ease rates.
Commercial Property: -10% to +5%
Recovery is ongoing, but accounts with CAT exposure or non-renewals may still see significant increases.
Real Estate: +5% to +10%
Frame residential risks continue to face challenges, while larger portfolios and commercial properties like warehouses and high rises are seeing more competitive rates.
General Liability: Flat to +10%
The outlook here is relatively stable, with most businesses seeing modest increases. Carrier positions vary based on loss experience, location, and program design.
Umbrella & Excess Liability: Flat to +10%
Competition is growing in higher layers, but complex risks still face significant increases.
Catastrophic Perils: -10% to +5%
Rates vary by exposure, with severe weather zones still facing premium increases.
Cyber Liability: -10% to Flat
Cyber insurance premiums are declining, but recent high-profile breaches like Crowdstrike may signal tougher market conditions in late 2024 and into 2025.
Cannabis: -5% to Flat
Cannabis operations, including growing, processing, and retail, are seeing slight reductions in rates, particularly in more established markets.
Workers’ Compensation: -3% to +3%
Workers’ compensation remains relatively flat, but concerns about rising claim severity and workplace safety are prompting caution.
See also: How AI is Redefining Insurance Pricing Strategies
HUB’s rate guidance is based on proprietary data and insights from brokers and risk consultants across North America. While rates remain steady in many areas, businesses should capitalize on this period of stability to strengthen their risk management strategies. Early engagement with brokers and a thorough review of coverage options will help mitigate future price increases and ensure comprehensive protection against emerging risks.
