Mixed rate increases predicted for 2023: WTW


North American commercial insurance buyers will continue to see rate increases in 2023, albeit at a materially lower level, though no rate relief is expected in commercial property, according to a report issued Monday by Willis Towers Watson PLC.

Inflation, the Russia/Ukraine conflict, ongoing supply chain challenges and a volatile interest rate environment will exert mounting pressure on commercial insurance rates throughout next year, WTW said in its Insurance Marketplace Realities 2023 report.

The impact of Hurricane Ian, which caused an estimated $75 billion in insured losses, will not be known for some time, but is likely to affect the reinsurance market initially, WTW said.

However, the second half of 2022 has seen improved pricing conditions, coverage and capacity for many commercial lines, WTW said.

Lower percentage increases are forecast across most lines of coverage, based on its analysis.

Among the report’s predictions:

– Property rates for catastrophe-exposed risks will increase 15% to 25% next year and challenged occupancies will continue to see double-digit rate increases.

– Cyber rate increases are averaging in the flat to 25% range, down from triple-digit increases in the spring, and capacity is beginning to broaden.

– Executive risks such as directors and officers are undergoing rate decreases in many areas, and primary D&O increases will be no higher than 2.5%, down from 20% or more in the spring.

– General liability rates will increase flat to 10%, from 4% to 10% or more.

– Umbrella/excess rates will increase from flat to 10% for high-hazard risks, while low/moderate hazard umbrella will increase 2% to 5%, and low/moderate hazard excess will see decreases of 10% up to 5% increases.

– Workers compensation will see rate decreases of 5% to flat.

“We are finally seeing rates that are more closely aligned with clients’ specific risk profiles, a promising trend for buyers as we head into 2023,” said Jon Drummond, head of broking, North America, WTW, in a statement.

Softening commercial pricing is helping companies to manage their risk-transfer spending more effectively, Mr. Drummond said.

 

 

 

 

 

 

 

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