Marsh: US Commercial Insurance Rates Up 3% on Hikes in Casualty

Commercial insurance rates during the third quarter in the U.S. increased 3%, with casualty rates up 10%.

According to Marsh’s Global Insurance Market Index — which noted the first decline in global commercial rates since the third quarter 2017 — said composite casualty rates in the U.S. were up 14% if workers’ compensation was excluded from the findings.

The increase of 10% in casualty is compared to an increase of 4% each of the last two quarters, and is the highest increase since the last quarter of 2020.

Brokerage Marsh said auto liability “continued to pose challenges due to large jury verdicts, along with rising repair expenses,” and the loss cost trend outpaced rate increases in umbrella and excess liability as it has for the past five years. Here, Marsh said higher frequency and severity in auto claims and higher severity trends in general/product liability claims impacted all business classes.

Even on accounts with good loss history and low hazard exposure, rates on umbrella programs went up 10% to 15%. Programs on the opposite end of the spectrum saw rates increase 30% or higher, Marsh said.

General liability saw some minor increases, Marsh added, but classes such as real estate, habitational and hospitality, public entity, and education were faced with higher rate increases in Q3.

Turning to commercial property, the composite rate declined 1% compared to an increase of 2% last quarter, as added capacity across industries and within all layers of programs led to more competition. Marsh said policy terms were “generally stable.”

“We are watching the markets closely for any impacts from the recent devastating storms during the North American hurricane season, and continue to offer support to our clients and the broader communities affected by them,” said Pat Donnelly, president, Marsh Specialty and Global Placement.

Marsh said carriers continued to focus on valuations, but “the reduction of inflation in 2023 and 2024 lessened their focus.” Clients continued to look at increased retentions and alternative solutions such as captive and parametric insurance.

Rates for financial and professional lines continued to decrease in Q3, matching the last quarters reduction of 3%. Marsh said directors and officers liability rates continued to decline—4% in Q3 compared to 5% in Q2.