Woodruff Sawyer: Property Rates Rise and the Cyber Market Improves: Q3 2022

According to an updated commercial lines report from insurance brokerage firm Woodruff Sawyer, the number and severity of named storms, as well as where and when they make landfall, will have an effect on property premiums for the rest of the year and into the following year.

Source: Woodruff Sawyer | Published on November 14, 2022

Active Hurricane season predicted

The number and severity of named storms, as well as where and when they make landfall, will have an effect on property premiums for the rest of the year and into the following year. The third quarter of 2022 was quiet until September 28th, when Hurricane Ian made landfall in Florida. The hurricane was devastating in terms of both human life and property loss. RMS, a risk modeling firm, estimates total insured losses to be in the $53 billion to $74 billion range.

Property insurance rates will be affected by Hurricane Ian’s losses. However, rate increases in the casualty market have slowed and have begun to slow in the cyber market. Furthermore, many directors and officers (D&O) insurance buyers will see rate reductions.

We explain pricing trends in the D&O, property, casualty, cargo, and cyber segments, as well as the causes of premium changes, in this Q3 2022 Commercial Lines Insurance Market Update.

D&O insurance rates remain competitive.

Pricing for D&O insurance remains competitive, and most buyers can expect rate decreases. Despite the fact that the severity of settled securities claims remains high, the number of securities class actions filed has decreased in the last two years, and this trend appears to be continuing in 2022. The decrease in the number of filed securities class actions, combined with the addition of several new insurance carriers in this space, has created a favorable market for D&O buyers, whether public or private.

Property insurance rates rise as a result of Hurricane Ian.

Hurricane Ian effectively ended the decelerating rate trend we observed in the property market in the first half of 2022. Even if their portfolios do not include Florida properties, property insurance buyers can expect rates to rise again. Property insurers were dealing with inflation throughout 2022, and non-hurricane catastrophes have been increasing in both frequency and severity. Non-hurricane disasters include wildfires, hailstorms, tornadoes, and floods. Reinsurance capacity is expected to be limited in 2023, affecting rates for all property insurance buyers.

Expect slower growth rates in the casualty market.

The casualty segment has remained largely unchanged since Q2 2022—general liability and auto rates are still rising, albeit at a slower rate. Casualty buyers can expect to pay more for their lead umbrella layers in the coming quarters, but their overall excess liability spend may be lower than in previous quarters due to increased market competition. Workers’ compensation remains profitable, and most businesses can anticipate lower costs for this coverage.

The cyber market is becoming more competitive.

The cyber market is finally showing signs of improvement. Premiums are still rising, but at a slower pace, and more insurers are competing on the primary and lower excess layers. Underwriters are still focusing on security controls, and companies that have invested in strong cyber security can expect the best renewal results.
Download your copy of the Commercial Lines Insurance Market Update for more information on the insurance impact of the third quarter of 2022.