USI Insurance Services has issued a mid-year update to its 2024 Commercial Property and Casualty Market Outlook, which includes details of recent changes in the insurance market and forecast trends for the rest of the year.

In the real estate sector, significant price increases from 2023 have mostly stabilized. Rates are fixed at up to 10% for both natural disaster (CAT) and non-CAT properties with minimal loss history and good risk quality. Reinsurance treaty renewals have returned to a more streamlined process with more capacity available due to a favorable pricing environment, lower losses from increased 2023 treaty holding, and healthy returns on capital.

USI noted that the reinsurance market is expected to stabilize, bringing total reinsurance capital to $561 billion, just below the 2021 high of $570 billion. This stability translates into a more predictable operating environment for the property insurance market.

In the injury sector, workers’ compensation rates and pricing environment remain competitive in most US states. General/product liability presents challenges, but some industry sectors are seeing steady renewals. The criteria for compensable mental injury claims may expand, which may increase their frequency, severity, and workers’ compensation premium adjustments.

Lawmakers are also considering more than a dozen bills in 2024 to expand or introduce presumptive laws for post-traumatic stress disorder (PTSD) as a compensable illness. The high medical costs associated with catastrophic injuries can lead to higher claims costs and insurance premiums, prompting insurance companies to monitor this area closely.

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As for the international sector, new capabilities of reinsurance companies and increased competition from insurance companies have led to lower prices compared to previous expectations. The market will continue to impose coverage restrictions on all lines of business, with an emphasis on foreign volunteer workers’ compensation, property, and merchandise in areas involved in hostilities or wars.

Restrictions include the decline of new risks in the Democratic Republic of the Congo, Israel, Lebanon, Russia, Ukraine, Belarus and Venezuela, as well as the non-renewal of smaller accounts in Israel. Medium to large accounts in Israel will be reviewed on a case-by-case basis, with possible adjustments in coverage.

Trends in the environmental, aviation and occupational risk sectors

In the environmental sector, chemicals forever remain an important issue, increasing product liability and pollution claims. Finding PFAS coverage in the marketplace will be more difficult for product exposures, including supply chain/distribution and site-specific risks.

The International Organization for Standardization (ISO) issued a PFAS exception in 2023, which now applies to most commercial general liability (CGL) and umbrella policies, USI noted. The environmental market is expected to tighten the availability of PFAS coverage, especially for liability for product contamination.

As for aviation, the USI highlighted that the market remains competitive, barring liability for war. The second half of 2024 is expected to witness continued competition between insurance companies in the aviation sector, with multiple options and potential savings in insurance premiums for insureds who have loss-free accounts.

However, the war liability market will face challenges and price increases for operators with liability limits in excess of $50 million due to global war market losses and reinsurers reducing war risk exposure. This trend is likely to continue as conflicts continue in Ukraine and the Middle East.

Finally, for executive and professional risks, premiums continue to decline, albeit at a slower pace, in most major lines of coverage, particularly directors’ and officers’ liability and cyber insurance. The rate of premium decline may stabilize in the second half of 2024 if leading insurers adopt more disciplined approaches.

Recent notable bankruptcies may lead to increased D&O claims in the latter half of the year, and any significant financial deterioration of the insured could negatively impact the next renewal.

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