What’s happening to the US commercial insurance market?

The commercial insurance market is currently favorable for most buyers, but economic and industry uncertainties create a sense of caution, according to Lockton’s latest Market Update.

The report provides a comprehensive look at market trends, economic indicators, and emerging risks that could impact insurance purchasing strategies in the US. The September edition, in particular, looks at post-election priorities, among other things.

Mark Moitoso, risk practices leader at Lockton, noted: “We’re seeing generally favorable market conditions – some of the best we have seen in the last five years – and with insurers reporting strong profits, there’s reason for continued optimism.

Liability coverage remains a notable outlier in the otherwise buyer-friendly market. Rising loss costs across nearly all liability lines continue to exert upward pressure on rates. The report suggests, though, that buyers can still expect predictability in these areas, despite the rate increases.

Meanwhile the current state of the market has spurred growing interest in alternative risk financing options. According to Lockton, organizations are increasingly incorporating alternative risk products into their risk management strategies to manage costs and mitigate volatility.

The Lockton report also pointed to insurers remaining closely attuned to economic trends and geopolitical developments, watching for any signals that could disrupt market stability; property insurance conditions improving; and workers’ compensation coverage remaining competitive, with reserve redundancies helping counterbalance pressure in third-party liability lines.

Additionally, social inflation continues to affect attachments, limits, and pricing for third-party liability. Insurers are said to be paying close attention to loss trends and reserve adequacy in response.

Also, the directors and officers liability market, especially for public companies, remains favorable due to strong capacity. Cyber insurance pricing is declining despite concerns about the potential for cumulative losses.

“The commercial insurance market is much like a living organism – constantly evolving in response to the experiences of insurers,” Moitoso added. “By staying informed of market-shaping trends and emerging risks, businesses can make smarter decisions, implement more effective risk management strategies, and better protect their people, operations, and finances.”

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