The US insurance market experienced varying rate trends in 2024 across personal and commercial lines, with composite rate increases reflecting both moderation and long-term upward pressure, according to MarketScout, a division of Novatae Risk Group.
While personal lines saw their highest annual rate increase in 12 years, commercial rates showed a deceleration compared to 2023.
Composite personal lines rates increased by 5.79% for the full year, with a moderation to 4% in the fourth quarter. Hurricanes Helen and Milton, while causing less insured damage than expected, contributed to reduced homeowners’ rate increases in Q4.
However, uninsured flood losses left significant gaps in coverage for many homeowners, according to Richard Kerr (pictured above), CEO of Novatae.
By category, homeowners insurance for properties valued under $1 million rose 3.3% in Q4, while those over $1 million increased 5%. Automobile insurance premiums grew by 5.3%, while personal articles coverage rose by 2.3%.
Kerr noted that while the Q4 moderation was a positive shift, the 2024 rate increase overall marked a significant adjustment, reflecting market trends that could evolve further in 2025.
Commercial insurance rates rose by an average of 3.75% in 2024, a decrease from the 4.56% recorded in 2023. Rates moderated to 2.64% in Q4, reflecting increased capacity and a lower incidence of insured catastrophic events.
Key lines such as commercial auto and umbrella/excess liability continued to see notable increases, while professional liability rates stabilized.
According to Kerr, the deceleration in commercial property rates was due in part to fewer catastrophic events and increased market capacity. However, he noted that long-term rate trends have been shaped by cycles of hard and soft markets, with the last seven years of steady increases benefiting intermediaries due to percentage-based compensation models.
In personal lines, auto insurance saw the largest increases, while homeowners and personal articles showed smaller gains. Commercial lines reflected a mix of trends.
Commercial auto insurance rose 6.7% in 2024, the largest increase among major categories. Umbrella/excess liability and general liability both increased 3.7%. Workers' compensation rates remained flat, while cyber liability increased 2.7%.
Small accounts (up to $25,000 in premiums) saw rates rise 3%, while medium accounts ($25,001–$250,000) increased 2.3%. Large and jumbo accounts (over $250,000) recorded a 2.7% increase.
The transportation sector experienced the largest rate hike, with premiums up 5.3%. Contracting and manufacturing saw increases of 3.3% and 3%, respectively, while energy sector rates rose 2.3%.
The insurance market continues to reflect broader economic and climatic pressures, including inflation, social trends, and catastrophic events. The personal lines sector has faced challenges from significant natural disasters, while commercial lines are navigating increased competition and stabilizing professional liability markets.
Kerr highlighted the need for market participants to monitor emerging trends and prepare for potential shifts in the rate environment as 2025 unfolds.
The moderation in rate increases in Q4 2024 may signal a shift in market dynamics, but risks such as social inflation, reserve adequacy, and economic pressures remain significant factors shaping the insurance landscape.
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