“Rates in January and February were consistent with what was reflected in the last quarter of 2021,” commented Richard Kerr, CEO of MarketScout. “However, rates did start to move up even more in March 2022, which could be the beginning of stronger increases for the next several quarters.”
Rising reinsurance prices appear to be filtering down to the primary market as losses mount, according to the firm’s quarterly report. The average rate increase for Q1 2022 came in at 6%, up slightly from 5.8% in Q4 2021.
By industry, transportation accounts and habitational risks saw the highest average increases at 10.3% and 8%. Buyers of cyber, umbrella liability and directors & officers liability experienced the highest rate increases in Q1 at 19.7%, 9.7%, and 8.7%, respectively.
Small and medium-size accounts saw slightly higher increases at 5.3% and 6.3%, with rates for large and jumbo accounts staying steady at 6.7%.
In the personal lines sectors, homeowners prices rose nearly across the board in Q1, regardless of geographic location or value, MarketScout found. Homes insured for more than $1 million saw average rates increase by 7%, up from 6.3% at the end of last year. Homes insured for under $1 million saw the average jump to 5.3% from 3.7% in Q4 2021. Coverage for personal contents is also rising, noted the firm.
“We expect homeowners rates across the US to continue to increase. What used to be considered relatively benign catastrophe prone areas of the US are now experiencing more and more claims,” said Kerr.
He added, “Further, several major insurers are dramatically cutting back their appetite for tough to place homes. This will impact the availability of coverage and result in significant rate increases or coverage restrictions for many homeowners whose insurer will issue a notice of non-renewal. MGAs and brokers are scrambling for capacity. The exit by these insurers will accelerate the formation of new capacity providers and insurers. In the meantime, rates are going to increase considerably for the tough to place homes; perhaps as much as 35%.”
Personal auto rates were relatively stable at plus 4.3 percent in Q1 2022, just a small increase from Q4 2021. MarketScout uses pricing survey data from the National Alliance for Insurance Education for its analysis of market conditions.