Commercial Insurance Rates Moderate in 2024 as Catastrophe Losses Decline

U.S. commercial insurance buyers experienced more moderate premium increases in 2024, with the average rate rise falling to 3.75% compared to 4.56% in 2023, according to MarketScout’s Market Barometer. This decline was largely influenced by a decrease in insured catastrophe events, which helped slow property rate growth in the fourth quarter. While commercial auto and umbrella/excess liability rates continued to climb, professional liability rates showed signs of stabilization.

The Market Barometer, which tracks commercial insurance trends since 2001, revealed that rate increases tapered off throughout 2024. The composite rate rose by 4.36% in Q1, gradually declining to a 2.64% increase in Q4. Sector-specific trends included a 6.7% Q4 rate hike for commercial auto and a 3.7% rise for umbrella/excess liability. Cyber insurance saw a sharp deceleration, with rates rising just 2.7% in Q4, down from 7.3% in Q3.

Workers’ compensation rates remained flat throughout 2024, and industries like transportation and contracting experienced the highest Q4 increases at 5.3% and 3.3%, respectively. Energy accounts and public entities saw the smallest rate increases, both under 2.5%.

With seven consecutive years of rising rates, the commercial insurance market may be poised for future shifts. Richard Kerr, CEO of Novatae, noted that intermediaries have benefited from these increases but should prepare for inevitable market changes.