CIAB: Q4 average premium increases picked up to 5.4% led by commercial auto and umbrella

By David Bull

Feb 19 - (The Insurer) - Premium across all account sizes increased by 5.4% on average in the fourth quarter, just up from 5.1% in Q3 2024, with commercial auto and umbrella seeing the biggest average increases at 8.9% and 8.7% respectively, as softening continued in cyber insurance.

These were the findings from the latest quarterly P&C market survey from The Council of Insurance Agents & Brokers (CIAB) released Wednesday.

According to the CIAB, Q4 2024 was the 29th consecutive quarter of premium increases across all account sizes, as most lines of business saw premium increases that were broadly equal to or lower than those seen in the third quarter of last year.

The exceptions were commercial auto and umbrella.

The update from the CIAB cited a recent report by broker CBIZ on commercial auto market conditions, where driver shortages, repair costs and supply chain issues all contributed to higher frequency and severity of claims in 2024 in the line of business.

It also noted an AM Best finding that the average loss per commercial liability claim doubled since 2014.

“Increased claim frequency and severity are associated with increased premium costs. On top of that, the recent rise in fleet electrification can also result in higher premiums due to the unique risk profile of electric vehicles,” said the CIAB update.

Commercial auto hardening picked up from increases averaging 8.5% in Q3 2024 to 8.9% in Q4 2024.

In umbrella, increases went from an average of 22.9% at their peak in Q3 2020 down to 7.0% in Q1 2024, but then back up to 8.7% in Q4 2024.

Outside of those two lines of business where hardening is accelerating, the update noted that in contrast, D&O, workers’ compensation, employment practices liability insurance and cyber all fell in Q4 2024.

The CIAB noted that while commercial property remained a challenge for brokers placing risks in the quarter, premiums for the line increased by an average of 6.0%, slowing from the 7.9% increases seen on average in Q3 2024 and the 11.8% seen in Q4 2023.

It cited one respondent from a large firm in the Midwest reporting that “property seems to be stabilizing” but added that others reported carriers pushing for higher deductibles for property risks with exposure to fire, wind and hail and a greater need to create layered coverage programs.

By account sizes, small account premiums only increased by 3.6% on average overall, in line with the third quarter of last year, amid strong appetite for the business.

Large accounts saw the biggest average increases at 6.3%, up from 5.3% in the third quarter of 2024.

CYBER SOFTENING AMID MORE CAPACITY, COMPETITION AND RESILIENCY

For cyber risks, survey results revealed increased capacity as the CIAB pointed to industry reports demonstrating the increased number of carriers competing for U.S. cyber business.

“Cyber resiliency may also have contributed, as industry cyber loss ratios have continued to fall from their peak in 2020 and 2021, despite a notable rise in ransomware attacks,” said The Council.

Q4 2024 was the third quarter in a row of premium decreases for the cyber line of business, with reductions that averaged 1.8%.

The update added: “It’s notable that premiums have continued to decrease even though ransomware attacks, often considered one of the main loss drivers in cyber insurance, continue to increase.”

It pointed to Howden’s 2024 report on the segment that included analysis of NCC Group data showing that ransomware was up 85% in 2023 compared to 2022, as well as recorded incidents in the first five months of 2024 that were up 18% on those already elevated levels.

“This may be due to the emphasis on implementing cyber risk controls after the spike in losses in 2020 and 2021, as touched on in previous survey reports,” said the CIAB.

It reported that a respondent from a large Northwestern firm said that “for cyber, required controls remained similar to prior quarter and year".

“Likewise, Aon’s 2024 report showed U.S. cyber loss ratios were down to 42% in 2024 from 67% in 2020 and 2021 despite the sharp rise in ransomware attacks, suggesting the focus on insured resiliency may be having an effect,” the CIAB update continued.