Hard Market Prices Continue

While not news to independent agents, commercial lines renewal rates rose again in the fourth quarter of 2023 — another sign that the hard market is here to stay — at least through 2024.

According to the Ivans Index, the average premium renewal rate increased year-over year for all major commercial lines except workers’ compensation, but every line of business averaged rate increases at renewal during the last three months of 2023, compared to the prior quarter. The monthly index provided by insurance software company Ivans, showed four lines of business — business owner’s policy (BOP), general liability, commercial property, and umbrella — reached year-end highs on renewal rate through the last quarter 2023. Workers’ compensation reached its highest rate, above zero, in November, Ivans added.

“As we begin 2024, we’ll be watching the data to see how the hard market trends of 2023 carry into this year and understand the macroeconomic factors impact on renewals and where markets are investing to create the greatest return,” said Brad Boyer, chief product officer at Ivans, in a statement.

Commercial property led all lines of business with an average premium renewal rate increase of 10.34% during Q4 2023 compared to nearly 10.1% in Q3 2023. In December, renewals were up 10.67% — the highest monthly average rate renewal movement of the year for the line.

BOP and general liability also saw the highest monthly rate renewal increases for 2023 in December, up 9.72% and 6.16%, respectively. BOP premium renewal rate increased an average of 9.12% in Q4 2023 versus 7.74% in Q3 2023. For general liability, rates were up in Q4 5.83% — slightly over the average increase of 5.43% the prior quarter. Umbrella renewal rate continued to rise in Q4 by an average of 6.39% versus 5.29% in Q3 2023. For commercial auto, Q4 2023 average premium renewal rate averaged 8.79%. The average increase was just over 7% the quarter before.

In workers’ comp, average premium renewals were up for the first time all year in November at 0.15%. Premium renewal rate change in workers’ comp averaged -0.64%, up from Q3 2023 at -0.99%.

Personal lines customers are also feeling the effects of the hard market. According to MarketScout, the composite rate increase for personal lines insurance across the U.S. was plus 4.75% for the fourth quarter and plus 4.61% when examining the entirety of 2023. The largest rate increases are found in the high value homeowners sector.

“We continue to see the largest composite rate increases in homes over $1,000,000 in Coverage A value, most likely because this includes all of the large homes in catastrophe-exposed locations,” Richard Kerr, CEO of Novatae Risk Group, said in a press release. “While the composite rate for large homes was 5.9% for 2023, some homeowners in tough areas or with prior losses are experiencing rate increases as high as 50%.”

MarketScout shared that homes under $1 million in Coverage A value averaged a rate increase of 4.32% for 2023. Auto insurance and personal articles were up 5% and 3%, respectively.