Insurance in 2024: Strategies for Hard Markets and Rising Premiums

In 2023, the insurance market saw the continuation of hard market conditions, marked by high premiums, deductibles, and stricter terms, particularly affecting property insurance more than casualty. According to an article by Risk Management Magazine, premiums for commercial property insurance rose by around 17% to 18%, while casualty premium increases were slightly smaller but still significant, with general liability and commercial auto premiums increasing by 8% and 9% respectively.

Factors such as inflation driving up property replacement costs and social/legal pressures increasing claims costs on the casualty side contributed to this trend. However, insureds can take steps to improve coverage and affordability.

Property insurance premiums are expected to increase further in 2024, particularly in high-risk catastrophe zones and industries. The hard market intensified after Hurricane Ian in 2022, causing significant damage and constraining reinsurers’ capital, thus increasing costs for insureds.

While losses from hurricanes in 2023 were less severe, flooding events and other natural disasters still impacted insurers and insureds, especially those in disaster-prone areas like the Gulf Coast or areas prone to wildfires.

On the casualty side, workers’ compensation insurance remained competitive, with rates potentially falling further in 2024. General liability and commercial auto insurance are expected to see moderate increases.

The cyber insurance market, although growing rapidly, saw single-digit price increases in 2023, with much of the market written on a non-admitted basis, leading to higher costs for insured companies.

Risk professionals can mitigate the impact of higher premiums and less coverage by rewording policy language, adjusting deductibles, and shopping the market for competitive terms.

Strong proposals and narratives are crucial in casualty policy negotiations, with underwriters looking for detailed risk information and explanations for past claims. Companies can also use analytics to identify and mitigate risks, potentially leading to lower premiums.

Ultimately, reducing claims costs benefits both insurers and insureds, highlighting the importance of data-driven risk management strategies for achieving more favorable rates.