Applied: Average renewal rates declined across five key Canadian coverages in Q4

By Chris Munro

Feb 10 - (The Insurer) - Average renewal rate rises across the five major lines of Canadian insurance coverage tracked by the Applied Commercial Index all dipped in Q4 on the prior-year period, although mean pricing in the business and professional services (BPS) segment ticked up compared with 2024’s third quarter.

The Applied Commercial Index tracks five key insurance segments in the Canadian market: BPS; construction, erection and installation services (CEIS); hospitality services; real estate property; and retail services.

Across those five segments, renewal rates averaged 5.02 percent in the three months to 31 December 2024, down from the prior year period’s 7.55 percent.

Each of the five lines, bar BPS, also saw renewal rates slow in Q4 2024 when compared with the third quarter of last year.

In BPS, the average premium renewal rate was 5.48 percent in Q4 2024, down from the prior year period’s 6.86 percent.

However, that 5.48 percent was a slight increase from the 5.30 percent that was seen in 2024’s third quarter.

According to the Applied Commercial Index, premium renewal rate change for CEIS averaged 4.78 percent in the final quarter of 2024, a slowdown from the 7.48 percent seen in Q4 2023 and from the 5.36 percent generated in last year’s third quarter.

The average hospitality services premium renewal rate change was 3.79 percent in 2024’s fourth quarter, a big reduction from the prior year period’s 7.73 percent and a close to 2-point decrease from the previous quarter’s 5.77 percent.

In the real estate property sector, premium renewal rate change averaged 4.59 percent in the final quarter of last year, another big reduction from the prior-year period’s 7.86 percent.

For Q3 2024, the average premium rate change was 5.32 percent for real estate property, the Applied Commercial Index noted.

Within the retail services segment, the average premium renewal rate change in 2024’s fourth quarter was 6.84 percent, a drop from the 9.22 percent seen during the same three-month period in 2023.

It was also a decrease from the 7.53 percent average premium renewal rate change that the Applied Commercial Index tracked in Q3 2024.

“This quarter’s results demonstrate a continued softening of the commercial lines market as premium renewal rates decrease quarter over quarter and compared to the average of last year’s same quarter,” said Steve Whitelaw, senior vice president and general manager, Canada, Applied Systems.

“As we enter 2025, we will continue to watch as macro trends, such as increased competition in the commercial lines market, continues to impact rates,” Whitelaw added.