The US commercial insurance market has generally remained stable and predictable for buyers, though insurers and business leaders continue to monitor various risks, including natural catastrophes, social inflation, and geopolitical uncertainties, according to the latest Lockton Market Update.
The quarterly report from Lockton, an international privately held independent insurance broker, provides insights into key factors shaping the market. It addresses US economic conditions, transaction liability insurance trends, and business considerations under the current presidential administration.
“2024 was another year of ups and downs and unexpected events, yet insurers’ earnings resiliency is generally strong,” said Mark Moitoso, Lockton’s risk practices leader.
He pointed to weather volatility, ongoing geopolitical tensions, and the election of a new U.S. president as factors impacting the market.
In this dynamic environment, business leaders need strong, actionable market intel to make informed decisions,” Moitoso added.
Despite concerns over third-party liability, ample capacity, increased competition, and strong reinsurance support have led to lower rates for property, workers’ compensation, directors and officers liability (D&O), and cyber insurance.
The property market, for example, has outperformed expectations despite losses from hurricanes and severe storms. However, individual circumstances may lead to significant variations in results for buyers.
Lockton’s report highlights that insurers' earnings remain strong, but the commercial insurance market still faces fragility.
While property market conditions are competitive, the overall insurance market continues to show signs of vulnerability. Workers' compensation remains a favorable area for insurers, continuing to perform well amid a stable market environment. However, liability insurers continue to grapple with concerns related to complex litigation and adverse reserve development, which could pose significant challenges going forward.
Directors and officers liability (D&O) pricing has been on a downward trend, particularly for public companies, which may provide some relief to those in this sector.
Meanwhile, although the cyber insurance market is currently favorable to buyers, there are indications that prices may firm in the future, affecting those seeking coverage.
Moitoso noted that although fears of a recession or a return to a hard market have largely diminished, the risk of unexpected events disrupting market stability remains.
"The market is very focused on pricing, structure, and terms and conditions for third-party coverages. That is one of the most pressing narratives as we enter 2025,” he said.
What are your thoughts on the current stability of the commercial insurance market? Share your opinion in the comments.
