Explore an interactive regional-risk graphic or listen to a brief podcast as part of this deeper dive into market conditions.
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.
Prior to the current conditions, the commercial insurance sector long enjoyed smooth sailing, with stable premiums and expanded coverage that continued for decades, according to the 2024 Commercial Insurance Outlook from Hylant. With the exception of a period after the September 11, 2001 terrorist attack on the World Trade Center — during which the market hardened for a short time — the last sustained hard market occurred in the 1980s.
Those in the commercial insurance space have now been up against a hard market for the last half-decade, which led many insurers to change course; whether that meant fewer renewals, increased premiums or terminating certain coverage products altogether.
But some insurance-industry watchers are optimistic.
“There are opportunities in the current market to continue to grow and prosper,” David Zona, senior vice president of commercial insurance, LexisNexis Risk Solutions, told PropertyCasualty360. “Economic conditions and business formation remain strong, and the agents and brokers who can serve both existing clients and effectively underwrite and assist those that are forming new businesses are poised for success.”
AM Best currently predicts a stable outlook for U.S. commercial lines in the year ahead.
In a recent update, which you can view in its entirety here, Alan Murray, associate director for AM Best, explained: “There are several key considerations underlying AM Best’s maintenance of a stable outlook for the U.S. P&C commercial lines segment. First and foremost, underwriting performance across commercial and specialty lines, both during and after the pandemic, and amidst the substantial economic and capital markets volatility of the past year has been persistently strong. Furthermore, admitted carriers in aggregate remain disciplined about risk selection, terms and conditions, and capacity deployment. As evidenced by the continuation of strong submission flow and growth in the non-admitted, or excess and surplus lines marketplace.”
“And importantly, from the investment perspective,” Murray continued, “strictly higher fixed income reinvestment rates have begun to significantly bolster operating profitability in virtually all lines, especially long-tailed casualty lines of business.”
When it comes to pricing and reserving, Murray explained that momentum remains positive, with the exception of workers’ compensation and certain management liability lines.
What are commercial clients’ concerns?
Many of the issues influencing the commercial insurance sector are also top concerns among the global business community at large.
According to Allianz’s 2024 Risk Barometer, cyber incidents are the top business risk concern, followed by business interruption, natural catastrophes, macroeconomic developments, fire and explosion, climate change, political risks and violence, market developments and the shortage of a skilled workforce.
The infographic below breaks down the top concerns for business owners worldwide, according to Allianz.
