RPS on the state of the property and excess insurance markets in Q3 2024

Risk Placement Services (RPS) has released its market updates for the third quarter, providing insights into trends and developments in the property and umbrella/excess insurance sectors.

Property market overview

According to James Rozzi (pictured above left), area executive vice president at RPS, the excess and surplus (E&S) property market has seen a notable shift in the first half of 2024 compared to the previous year. Average rates for E&S property have decreased by 5% to 12.5% in many cases.

However, not all accounts or asset classes have experienced these rate reductions or enhanced coverage.

In his report, Rozzi noted that some carriers are stepping away from accounts that no longer align with their models or where deals made opportunistically last year do not justify a rate reduction. Carriers are striving to maintain a balance between disciplined underwriting and retaining their market leadership.

Looking ahead, Rozzi emphasized that not all accounts will see rate reductions or improved coverage. He indicated that approximately 80% of the business handled so far in 2024 has shown better results than in 2023, which is favorable for buyers.

These results are expected to allow carriers to remain profitable in the long term, even if adverse weather conditions arise. However, the remaining 20% of deals are facing challenges, with rate increases tied to poor loss performance and market conditions where supply does not yet meet demand.

Rozzi also said that the market is unlikely to experience a full-scale softening, even if the hurricane season is less severe. Carriers are employing artificial intelligence, enhanced data, and advanced underwriting models to make informed decisions on premium charges and when to withdraw from certain risks. This disciplined approach is expected to prevent a significant market downturn.

Umbrella/excess market update

Russ Stein (pictured above right), area executive vice president at RPS, reported that the current legal environment, coupled with inflation driving up medical costs, is leading to more complex and expensive claims in the middle-market business segment.

According to Stein, this has resulted in continued displacement from standard and package carriers, with a corresponding increase in business entering the E&S market. Middle-market insureds, who previously secured lower premiums outside the E&S market, are now facing pricing challenges and higher costs.

Stein also noted that auto insurance claims remain a significant issue, affecting capacity, attachment points, and pricing for Excess and Umbrella carriers.

A key theme in the current casualty insurance market is the importance of accurate and thorough submission information. Stein emphasized the need for continuous communication between insureds, agents, brokers, and underwriters to develop the most competitive programs.

Given the persistent legal challenges in the market, partnering with an expert in the casualty space who can thoroughly explain market dynamics and secure the best solutions for clients remains critical.

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