US personal lines insurance – how did it perform in Q1 2024?

The personal insurance landscape in the United States has seen a steady increase in rates, with the composite personal lines rate maintaining a rise of 4.75% from the fourth quarter of 2023 into the first quarter of 2024.

This trend reflects the insurance industry’s cautious stance ahead of a predicted active hurricane season for 2024, which will add to the reluctance of underwriters to lower rates in the near future.

The data supporting these observations comes from pricing surveys carried out by the National Alliance for Insurance Education and Research, which complements MarketScout’s analysis of market conditions. These surveys provide a quantitative foundation for understanding rate adjustments, informed by new and renewal policy placements across the country.

For the first quarter of 2024, the summary of personal lines rates adjustment was as follows:

• Homeowners with properties valued under $1,000,000 saw an increase of 4.7% in their insurance rates
• For homeowners with properties valued over $1,000,000, the rate hike was slightly higher at 5.3%
• Automobile insurance rates also experienced upward movement, matching the 5.3% increase observed in the high-value homeowners’ segment
• Personal articles coverage went up by 3.7%, indicating a more moderate rise compared to other categories

Richard Kerr, CEO of Novatae Risk Group, highlighted the industry’s current predicaments, noting that increases will be the norm for personal insurance in the interim.

“Insurers are carefully watching as forecasters expect an active hurricane season in 2024. This certainly doesn’t make underwriters want to reduce rates any time soon,” Kerr said.

He also noted that the availability of insurance, or capacity, for some major insurers has been significantly restricted in areas prone to catastrophic events (CAT areas), with some insurers being downgraded or withdrawing from these regions altogether.

“This activity will result in higher homeowners’ rates next quarter,” Kerr concluded.

The trend also underscores the impact of climatic predictions on insurance pricing and the broader implications for the industry, particularly in regions susceptible to catastrophic events.

As insurers adjust to these challenges, policyholders are facing higher costs, reflecting increased risk and the industry’s efforts to maintain solvency and reliability in the face of potential natural disasters.

Meanwhile, commercial insurance is not performing with gusto either, as another MarketScout report found that pricing in the sector went up by 3.9% in the period amid persistent worries surrounding catastrophes and liability outcomes.

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