Council of Insurance Agents & Brokers
11/18/2024 | Press release | Distributed by Public on 11/19/2024 12:13
News Release: D&O Premium Increases Down while Umbrella Crept Up in Q3, CIAB P/C Market Survey Shows
FOR IMMEDIATE RELEASE
Media Contact: Nicole Vasile
Vice President, Marketing & Communications
[email protected]
Survey Contact: Zachary West
Content Specialist
[email protected]
D&O Premium Increases Down while Umbrella Crept Up in Q3, The Council's P/C Market Report Shows
WASHINGTON, D.C. - Moderation in premium increases continued in Q3 2024, according to The Council's Quarterly P/C Market Report. Premiums across all account sizes rose by 5.1%, roughly the same as the 5.2% recorded in the previous quarter. Still, Q3 2024 also marked the 28th consecutive quarter of premium increases across all account sizes.
Signs of premium moderation were even clearer across the lines of business. Respondents reported lower premium increases in Q3 2024 for all lines of business except umbrella. Workers compensation, D&O, and cyber premiums continued to fall-D&O showed the largest average decrease in premiums at -1.9%. Respondents pointed to more competition among carriers as one of the drivers for this decrease; relatedly, a Woodruff Sawyer analysis of the market showed an influx of new capital and thus increased capacity, leading to downward pressure on D&O premiums.
Premiums for the umbrella line of business increased by 8.6%, the highest out of all lines. Carrier wariness and reduced capacity for the line were two of the factors behind this increase, according to respondents-and 70% of those respondents who noted a change in umbrella underwriting capacity said it decreased.
Research by reinsurer Gen Re and broker Risk Placement Services fill out the umbrella market picture with another culprit: social inflation. Gen Re showed that both claim frequency and claim severity for umbrella were noticeably up between 2020 and 2022, which the company attributed to more litigation and more nuclear verdicts.
Likewise, RPS analysis of market trends found that plaintiff attorneys had become more sophisticated in seeking out information they could use to pursue higher settlements, especially in the realm of commercial auto claims, which led to more losses piercing the umbrella layer. Combined with the almost $1 billion spent on attorney advertising in 2021, social inflation had a sizable negative impact on a line that, in the words of Gen Re, "was never intended to be a product that regularly experiences losses."