Rates
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Social inflation is driving “cat-type” losses, with an increase in $50mn-plus verdicts.
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Retentions and coverage could be affected by future adverse claims trends.
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Given ample capacity and no sharp increase in demand, a market sea change is not expected, barring an unforeseen economic event.
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WTW said adverse development “is evident” in auto liability lines from 2015 to present.
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Premium inflation holds, as loss-cost inflation trends continue to moderate.
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This continues a consecutive quarterly gain of over 6%.
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Personal lines rate filings are rising, even as some inflation drivers slow.
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Commercial property rates for February rose 10.77%, up from 10.30% in January.
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Premiums rose an average of 7% across all lines, down from Q3.
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Carriers expressed confidence on the line’s ability to withstand medical inflation.
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Otis could be a $2bn-$3bn loss, but more information is expected before June renewals.
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CSAA writes over 70% of its business in the Golden State.
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This follows a record-breaking $63bn of premium and 24.1% growth for 2022.
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The carrier expects to "get smaller in New Jersey" due to lack of rate adequacy.
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The broker said softening was emerging in some lines, but cat risks remain challenging.
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The index’s 2023 peak was Q2, when rates increased 19%.
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The growth positives of last year are showing signs of fading.
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Falling rates in finpro and increased competition in property drove the trend.
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Commercial property pricing rose 11%, while personal auto grew 21.9%.
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Broker earnings reflect shifting tailwinds, with margins revealing the real winners.
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The drivers are not surprising, but the extent of development is, execs said.
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Property rate increases decelerated to 6% in Q4, compared to 7% in Q3 and 10% in Q2 2023.
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Rates are generally cheaper than the admitted market.
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The average 2023 premium renewal rate change for commercial property was significantly higher than 2022 across all months.
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The broker’s Q4 programs reinsurance change led to a one-time $19mn charge that will allow it to reduce its PML exposure.
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Organic growth will slow from historically elevated levels and the increased cost of debt will take its toll.
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The brokerage reported that polled carriers, however, have pointed to ransomware activity reverting to 2019 levels to argue current pricing is unsustainable.
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A “return to minimal valuation increases can be expected soon”, the broker wrote in its 2024 P&C market outlook report.
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European rates on line increased by 7.60%, while in the US prices were up 5.25%.
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2024 is likely to be another challenging year for the industry, and commercial in particular, though improvement in personal lines may soften the blow.
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The broker said over-placement on some deals was a positive sign for brokers, though reinsurance capacity is still very tight in some areas.
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Reinsurers are making some adjustments to secure target signings but appetite to grow is finely balanced.
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Carriers aren’t calling off their retreat from the market until tangible, actionable regulations emerge from commissioner Lara’s camp, sources told this publication.
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The need to recognize adverse development in the back book is the most plausible culprit for market behavior, and an escalation of rhetoric.
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Cooling CPI metrics and improving loss ratios indicate a positive shift for the personal auto industry, but results are not yet back to where they need to be.
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The 2024 budget increases net operating expenses to $40.2mn, up from $35.2mn in the 2023 budget.