Will the P&C insurance market stabilize in 2024? (2024)

FAQs

Will the P&C insurance market stabilize in 2024? ›

Navigating the P&C Market in 2024

More customers are churning in search of lower premiums.

Nationally, homeowners' premiums grew an average of 21% in the year ended May 2023, per Policygenius, and they're likely to increase again in 2024. That's threatening the industry's vaunted 84% average retention rate.

In 2024, we expect commercial property growth rates in the high single digits, and liability rate growth in the low single digits, on average. Commercial lines average rates increased by 8.1% year-on-year in 3Q23, slower than the 8.9% gain in 2Q23, according to the CIAB.

Premium volume is likely to decline further in 2024. Softening market conditions are anticipated to prevail for the third consecutive year in 2024, given segment results and heightened competition. Aon's D&O market survey indicates that D&O primary renewal rates dropped in the last seven consecutive quarters.

The market has been hard since 2018/2019, rising strongly until the end of 2020 when in some classes the rate movements began declining. Looking a little closer at the different parts of the global P&C insurance market, it is primarily property that is driving the hard market.

As a whole, analysts are optimistic about the outlook for stock prices in 2024. The consensus analyst price target for the S&P 500 is 5,090, suggesting roughly 8.5% upside from current levels.

Industry performance is anticipated to improve in 2024, fueled by better personal auto performance as rate increases take hold and claims severity trends moderate, and growth in investment income from higher yields. Still, the market combined ratio is projected at slightly over 100% for 2024.

1. State Farm. State Farm is the industry's biggest player, both in the US and overseas. The Bloomington, Illinois-based P&C insurance giant wrote almost $78 billion worth of premiums in the past year.

Although reinsurance capacity improved in 2023 and into 2024, the cost of available reinsurance capacity remains high. The continued impact of catastrophic events is a major factor driving up costs, along with the increasing cost of capital, financial market volatility and inflation.

The commercial insurance market began to harden around 2019, after years of gradual shifts that lead to higher premiums and reduced capacity. The overall hard market is expected to remain for the better part of 2024.

Why does D&O drop so much? ›

(Insured retentions tend to decline as markets grow softer, as clients can shop around for coverage.) Direct premiums written declined by nearly 10% in 2022, due largely to the economic environment that made M&A and IPOs less attractive. Less M&A and IPO activity diminishes demand for public D&O coverage.

D&O insurance is designed to respond to a wide range of claims against individual directors' and officers'. Liability can arise from claims including the organization's financial performance, mismanagement, failure to comply with regulations or laws, employment practices, and even cyber events.

What is the average cost of D&O insurance? Small businesses pay an average premium of $138 per month, or $1,653 annually, for directors and officers insurance.

As we venture into the new year, it's evident the challenges posed by the Hard Insurance Market trend of 2023 are persisting in 2024.

In emerging markets revenue growth is expected to reach 5.1% on average in 2024 and 2025. This revenue growth may soften the impact of the ongoing profitability and liquidity challenges the segment faces. Claims volumes and costs across lines of business remain elevated in most major markets.

A hard market is the upswing in the insurance market cycle, when premiums increase, coverage terms are restricted, and capacity for most types of insurance decreases.

Experts predict a 5% to 25% increase in commercial property insurance premiums in 2024. Our team is here to help you understand the current commercial property insurance market, empowering you with risk management strategies to protect your organization.

U.S. Homeowners' Insurance to Improve in 2024 on Sharply Higher Pricing. Fitch Ratings-New York/Chicago-21 February 2024: U.S. homeowners' insurance carriers/providers face continuing challenges in projecting loss costs and insuring to value amid higher inflation and economic uncertainty, Fitch Ratings says.

Global Insurance Brokerage Market Outlook:- The global Insurance Brokerage market size was valued at USD 285147.0 million in 2022 and is expected to expand at a CAGR of 6.47% during the forecast period, reaching USD 415272.0 million by 2028. An insurance broker sells, solicits, or negotiates insurance for compensation.

Reinsurance Supply-Demand Dynamic

Last year began with limited capacity for property catastrophe coverage. However, by 2024, a significant increase in supply led to abundant capacity, driven by appealing risk-adjusted returns for property catastrophe reinsurance.