08/28/2024 | Press release | Archived content
The excess and surplus (E&S) lines property insurance market experienced a significant shift to a softer market in the first half of 2024, with a steady decline in rates and competition for market share defying expectations heading into the year, according to Risk Placement Services' (RPS) "2024 Q3 State of the Property Market" report.
"What's interesting about 2024 is that, when we ended 2023, we all predicted a much more competitive and stable market to guide the narrative of 2024. What we've gotten thus far is a lot of inconsistency and opportunistic underwriting by many of the major markets," James Rozzi, area executive vp for RPS, noted in the report. "We've also seen carriers fight hard to grow, retain business and increase capacity where they can in order to maintain market share. This behavior has quickly propelled us into a buyers' market that's created a much-needed reprieve for insureds and a lot of frustration among insurance carriers with deteriorating market conditions."
The E&S property market has offered clients rate reductions in most geographies and asset classes in 2024, following record-breaking profits in 2023, the report stated.
In the first half of the year, rate reductions averaged between 5% and 12.5%, RPS reported. Some accounts, having been completely restructured, saw property rate decreases "well above" 25%, according to the report. While flat renewals and slight increases are still occurring, flat to slightly down is the prevailing experience for property rates, RPS stated.
While many E&S carriers are balancing between market discipline and growing market share, Rozzi noted that "carriers also have a lot of perspective about how much rate came back into the market the preceding five years, and data certainly demonstrates that carriers can afford to give back a few points and still have an adequately priced account on their books."
An active and potentially record-breaking North Atlantic hurricane season could upset the property market's current stability, RPS stated.
"The market, while stable and competitive, is very fragile. Many insurance veterans feel that we're a major storm or CAT event away from reversing the current trend, and the outcome of this year's hurricane season is going to have a significant impact on how 2024 ends and 2025 begins," according to Rozzi.
The RPS report provided an in-depth look at various market segments:
As the E&S property insurance market navigates these varied conditions, industry professionals remain cautiously optimistic, closely monitoring the impact of the continued hurricane season on the property insurance landscape.
"Even if the hurricane season ends up being quiet or less impactful to the marketplace, I still think that carrier discipline will prevent the market from going into free-fall mode," Rozzi stated. "It's important to remember that carriers are using artificial intelligence, better data, enhanced models and a lot of other tech-driven underwriting tools to help them determine what premium to charge for risks they want to keep and when it's best to walk away."