CIAB Q4’23 P/C market report: premium increases decelerate amid rising client concerns

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In the Q4 2023 report by The Council of Insurance Agents & Brokers (CIAB) on the Commercial Property/Casualty Market, premium increases have persisted for the 25th consecutive quarter, but at a slower rate. The average increase across all accounts is 7%, down from 8.1% in the previous quarter. However, there’s a noticeable increase in client negativity towards the industry.

Most lines of business saw smaller increases compared to the previous quarter, some even lower by a percentage point or more.

Increases in Directors and Officers (D&O) insurance remained very low, with an average increase of just 0.1%. Similarly, cyber insurance saw increases of 0.7%, the first time it has been below 1% since the beginning of 2019. Other lines, such as surety bonds and terrorism insurance, also experienced increases below 1%.

The most significant increase was observed in commercial property insurance, rising by 11.8%. However, this is notably lower compared to the 17.1% increase in Q3.

CIAB reports that factors contributing to the increases in commercial property insurance remain consistent: “issues with reinsurance capacity and pricing, as well as natural catastrophe losses driven by climate change. Inflation was also mentioned as a justification.”

As a result, carriers are exercising caution in deploying underwriting capacity for this line, making commercial property the primary challenge for many respondents when it comes to placement.

Despite the deceleration in premium increases this quarter, client negativity towards the industry is more pronounced.

According to CIAB, “80% of respondents reported that future premium increases were a top concern for their clients”. High current premiums and limitations on coverage were also among the top client concerns in Q4.

On average, 62% of clients felt some level of rate fatigue, a decrease from the previous quarter’s 70%. However, there was a higher average percentage of clients feeling burdened by carrier requests for information, and more clients expressed some level of mistrust towards the industry.

As a response, enhancing customer experience has become the top priority for brokers going into 2024, with 52% of respondents listing it as one of their top three priorities.

CIAB quotes a respondent from a large Southeastern firm who emphasises the importance of client satisfaction: “Retaining business is always key, but more difficult than ever in this marketplace. Clients are more likely to look at other options including other brokers. We’re looking for more people and better processes to keep servicing our clients in the way they have come to expect.”

The report also highlights that several respondents plan to utilise AI to enhance customer experience by streamlining interactions and improving access to data for both customers and employees.

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