Property Challenges in Q1: Softening Market, Persistent Excess
- Property insurance rates are softening, but excess and umbrella coverage remain a challenge, according to data.
- Despite California wildfire losses, the excess and surplus (E&S) property insurance market experienced a downward pricing trend in the first quarter, according to a recent analysis by CRC...
- CRC Group reported that, on average, 63% of accounts renewed at flat or reduced rates during the first quarter.
Mixed Bag: Property Insurance Rates dip While Cyber and Umbrella Coverage Costs Climb
Table of Contents
- Mixed Bag: Property Insurance Rates dip While Cyber and Umbrella Coverage Costs Climb
- Property Insurance, Cyber Insurance, and More: A Q&A on Current Market Trends
- Property Insurance: What’s Happening with Rates?
- Excess and Umbrella Coverage: Still Pricey?
- Errors & Omissions (E&O), Employment Practices Liability (EPL), and Directors & Officers (D&O) Insurance: What’s the Outlook?
- How is Errors & Omissions (E&O) Insurance Performing?
- What about Medical Professional Liability (MPL) E&O?
- What’s the Status of Architects and Engineers (A&E) E&O Insurance?
- Are lawyers’ E&O Rates Going Up or Down?
- And Real Estate E&O ?
- How is Private Directors and Officers (D&O) Liability Insurance Faring?
- How is Employment Practices Liability (EPL) Insurance Trending?
- Why Are EPL & D&O Seeing Rate Decreases?
- Cyber Insurance: A Shifting Landscape?
- Overall: What Does This “Mixed Bag” Mean for Businesses?
Property insurance rates are softening, but excess and umbrella coverage remain a challenge, according to data. Cyber insurance, after initial increases, is also seeing price decreases.
Property insurance Sees Rate Reductions
Despite California wildfire losses, the excess and surplus (E&S) property insurance market experienced a downward pricing trend in the first quarter, according to a recent analysis by CRC Group. Their REDY index indicates property renewal pricing decreased by 1.5% in January, 1.3% in February,and 2.6% in March.
CRC Group reported that, on average, 63% of accounts renewed at flat or reduced rates during the first quarter. Approximately 28% saw modest, single-digit increases.
“The extent of rate reductions varied based on account characteristics and loss history, with some accounts achieving reductions in the single digits and others realizing decreases of up to 40%,” the company stated.
Increased market competition has also led to improvements in policy terms for buyers. Insurers are reportedly lowering deductibles, increasing sublimits, broadening policy language, and offering more competitive pricing. while valuation remains a concern, carriers are closely monitoring ongoing tariff discussions.
the property market is also benefiting from an increase in choice capital sources, including insurance-linked securities (ILS) and catastrophe bonds. “This influx has played a key role in supporting market stability.We anticipate that the downward trajectory will continue for the foreseeable future,” CRC Group noted.
Excess and Umbrella Coverage still Pricey
In contrast to property insurance, excess and umbrella renewals continued to see double-digit increases. Pricing rose by 15.8% in January, 15.7% in February, and 12.3% in March.
However, CRC Group observed a slight moderation of excess casualty rates during the quarter, despite rising liability claim costs and “nuclear verdicts.”
According to the analysis, insureds, facing cumulative rate increases, are seeking alternatives to meet budget and risk tolerance requirements.This includes aggressive marketing and leveraging a competitive surroundings as the casualty market expands.
The use of alternative risk transfer mechanisms and creative program structuring is also on the rise. “As insureds continue to explore large, self-insured retentions, captives, and multi-year aggregated programs, E&S carriers will need to respond to retain primary and buffer layers,” CRC Group stated. While these solutions require a higher level of risk tolerance and financial resources, they represent a notable trend.
Despite some price moderation, the excess and umbrella market remains challenging. A significant number of accounts saw increases above 10% in the first quarter, notably those with adverse development, tough auto exposures, or third-party bodily injury claims.
carriers are continuing to re-underwrite more challenging risks, adjusting prices, cutting capacity, and restricting coverage.
E&O Mixed; EPL and Private D&O Down
Errors and omissions (E&O) insurance was the only other line to see increases each month in the first quarter, with average renewal pricing up 2.9% in January,2.5% in February, and 3.2% in March.
CRC Group reported that miscellaneous E&O buyers experienced marginal increases on most medical professional liability (MPL) accounts in 2024, with additional price increases unlikely in 2025. this is attributed to substantial capacity from both standard and non-standard markets, and the entry of managing general agents (MGAs) disrupting rate increases.
Architects and engineers’ E&O saw a stable marketplace with a slight slowdown in submission volume and continued strong interest in artisan contractors.
Rates are “flattening out a bit” as A&E pricing lags behind other softening lines of business,though certain disciplines remain more challenging. ”Rate increases of 3% to 12% are expected on larger accounts in certain jurisdictions such as New York,California,and Florida or difficult classes including geotech,structural or soil. Revenue growth results in premium increases in regions where construction is still booming,” the report stated.
Accounts with a higher concentration of residential work, including condos, remain difficult to place. Some insurers are non-renewing accounts due to claims, and a few have exited the class entirely, while others have entered the market.
Smaller accounts with clean track records are seeing greater competition, with rates flat to up 5%, while mid-market business pricing is up 3% to 8%.
Lawyers’ E&O pricing is “lower” due to an influx of capacity, even though many carriers anticipate rising claims and defense costs.
While few insurers will consider solo practitioners and smaller firms, pricing remains competitive.
The real estate E&O marketplace is “becoming more aggressive,” with new entrants on the real estate developers side leveraging endorsements to offer similar coverage as established carriers. “We have seen even more aggressive competition for larger insureds from new market entrants,” the report added.
Private directors and officers (D&O) liability insurance pricing decreased by 1.6% in January, 1.4% in February, and 0.5% in March.
“The private D&O market remains soft heading into 2025, with most accounts renewing flat or seeing modest rate reductions up to 10%, particularly for claim-free insureds with strong financials,” CRC Group stated.
Capacity remains abundant,fueled by new MGAs and insurtech underwriting facilities staffed by experienced underwriters. Competition is most intense on excess layers, with pricing “compressed” and carriers offering enhanced terms or flexible retentions to win business.
Employment practices liability (EPL) insurance pricing was down by 0.6% in January, 0.3% in February, and 1.1% in March, with soft market conditions expected to continue.
The company cited “abundant” capacity driven by new entrants, including MGAs and insurtechs, mirroring trends in the private D&O space. “Most clean risks are renewing flat or with modest rate decreases,and underwriters remain aggressive in pursuit of new business,” it continued.
However, growing social and political headwinds are a concern.”Companies are quietly eliminating roles,scaling back programs and reshaping their messaging,which is creating a breeding ground for employee dissatisfaction. This environment is expected to lead to a rise in discrimination, retaliation and wrongful termination claims in 2025 and beyond,” the report stated.
Underwriters are starting to increase retentions across the board, a trend likely to persist as insurers attempt to balance pricing stability with increased claims volatility.
Cyber insurance Pricing Declines After Initial Q1 Increases
Cyber insurance renewal pricing moved back into negative territory by the end of the quarter, with reductions averaging 0.9% in March, compared to increases of 1.5% and 0.7% in January and February, respectively.
“Claim frequency remains at an all-time high. Business email compromise, third party litigation, supply chain claims and ransomware attacks all have increased by double-digit percentages,” CRC Group observed.
Despite the high claim frequency, the cyber market continues to attract new capacity, fostering creativity, competitive pricing, and broader terms and conditions.
“as reinsurance actuaries begin to comb through complete 2023 and
Property Insurance, Cyber Insurance, and More: A Q&A on Current Market Trends
The insurance landscape is constantly shifting. Recent data reveals a mixed bag of trends, with some areas seeing rate reductions while others face continued increases. This article, presented in a Q&A format, dives deep into the current state of property, cyber, and other key insurance lines, providing insights into pricing, coverage, and potential impacts. Let’s explore what’s happening in this dynamic market.
Property Insurance: What’s Happening with Rates?
Are Property Insurance rates Decreasing?
Yes,in a notable shift,property insurance rates are experiencing a downward trend. Data from the frist quarter indicates softening prices, even despite losses from the California wildfires. The REDY index from CRC Group, for example, showed declines of 1.5% in January,1.3% in February, and 2.6% in March.
What’s Behind the Property Insurance Rate Reductions?
Several factors are contributing to these rate reductions. Increased market competition is a key driver. Additionally, an influx of capital from sources like insurance-linked securities (ILS) and catastrophe bonds is supporting market stability. The availability of more coverage options and more competitive pricing also helps. these market dynamics are leading insurers to improve policy terms for buyers, offering lower deductibles, increased sublimits, and broader policy language.
Are All Property Insurance Accounts Seeing Rate Reductions?
Not necessarily. While the trend is downward, the extent of rate reductions varies. According to CRC Group, approximately 63% of accounts renewed at flat or reduced rates, while about 28% experienced modest single-digit increases. The exact reductions depend on factors like account characteristics and loss history. Some accounts have seen decreases of up to 40%.
What Concerns Remain in the Property Insurance Market?
While property insurance rates are decreasing, valuation remains a concern. Carriers are also closely monitoring ongoing tariff discussions.
Excess and Umbrella Coverage: Still Pricey?
Are Excess and Umbrella Coverage Rates Increasing?
Yes, in stark contrast to property insurance, excess and umbrella coverage renewals continue to see double-digit increases. Prices rose by 15.8% in January, 15.7% in February,and 12.3% in March,according to the data.
Why are Excess and Umbrella Coverage Rates Increasing?
Several factors are at play. Rising liability claim costs and the impact of “nuclear verdicts” (large jury awards) are key contributors. Furthermore, insurers are re-underwriting more challenging risks, adjusting prices, reducing capacity, and restricting coverage.
Are There Any Signs of Moderation in Excess and Umbrella Coverage?
Yes, there was a slight moderation of excess casualty rates during the first quarter. However, the market continues to be challenging. A significant number of accounts still experienced increases of over 10%,particularly those with adverse loss advancement,tough auto exposures,or third-party bodily injury claims.
What Strategies are Insureds Employing to Manage Rising Excess and Umbrella Costs?
Insureds are exploring various strategies to mitigate the impact of rising costs. these include aggressively marketing their risks and leveraging a competitive market. They’re also turning to alternative risk transfer mechanisms and creative programme structuring, such as exploring large self-insured retentions, captives, and multi-year aggregated programs.
Errors & Omissions (E&O), Employment Practices Liability (EPL), and Directors & Officers (D&O) Insurance: What’s the Outlook?
How is Errors & Omissions (E&O) Insurance Performing?
Errors and omissions (E&O) insurance was one of the other areas seeing increases in the first quarter. Average renewal pricing increased by 2.9% in January, 2.5% in February,and 3.2% in March. however, the landscape varies by sector.
What about Medical Professional Liability (MPL) E&O?
Miscellaneous E&O buyers experienced marginal increases on most medical professional liability (MPL) accounts in 2024, with additional price increases unlikely in 2025. This is attributed to considerable capacity from both standard and non-standard markets, and also the entry of managing general agents (MGAs) disrupting rate increases.
What’s the Status of Architects and Engineers (A&E) E&O Insurance?
the A&E E&O market saw a slight slowdown in submission volume. Rates are “flattening out” but certain disciplines remain challenging. Increases of 3% to 12% are expected on larger accounts in certain jurisdictions or with arduous classes. Accounts with a higher concentration of residential work, particularly condos, remain difficult to place. Smaller accounts with clean records are seeing greater competition, with rates flat to up 5%, while mid-market business pricing is up 3% to 8%.
Are lawyers’ E&O Rates Going Up or Down?
Lawyers’ E&O pricing is “lower” due to an influx of capacity, even though many carriers anticipate rising claims and defense costs. While few insurers will consider solo practitioners and smaller firms, pricing remains competitive.
And Real Estate E&O ?
The real estate E&O marketplace is “becoming more aggressive,” with new entrants on the real estate developers side leveraging endorsements to offer similar coverage as established carriers.”We have seen even more aggressive competition for larger insureds from new market entrants,” the report added.
How is Private Directors and Officers (D&O) Liability Insurance Faring?
Private D&O liability insurance pricing decreased by 1.6% in January, 1.4% in February, and 0.5% in March. The market remains soft heading into 2025, with most accounts that are claim-free seeing reductions of up to 10%.
How is Employment Practices Liability (EPL) Insurance Trending?
Employment practices liability (EPL) insurance pricing was down by 0.6% in January, 0.3% in February, and 1.1% in March, with soft market conditions expected to continue. Though, growing social and political headwinds are causing concern.
Why Are EPL & D&O Seeing Rate Decreases?
Like many other forms of insurance, capacity has increased, with new market entrants leading the charge. This increase in capacity has lead to a general decrease in rates.
Cyber Insurance: A Shifting Landscape?
Are Cyber Insurance rates Increasing or Decreasing?
Cyber insurance renewal pricing moved back into negative territory by the end of the first quarter, with reductions averaging 0.9% in March. This followed increases of 1.5% and 0.7% in January and February, respectively.
What’s Driving the Cyber Insurance Rate Changes?
Despite high claim frequency due to business email compromise, third-party litigation, supply chain claims, and ransomware attacks, the cyber market continues to attract new capacity. This influx is fostering competition, leading to competitive pricing, and broader terms and conditions.
What Should Businesses Consider Regarding Cyber Insurance?
While rates might potentially be decreasing,claim frequency remains high. Businesses should still prioritize robust cybersecurity measures and work with brokers to ensure adequate coverage that meets their needs.
Overall: What Does This “Mixed Bag” Mean for Businesses?
The insurance market is presenting a complex picture. Businesses need to proactively assess their risk profiles, engage with brokers, and regularly review their coverage to navigate these evolving trends. A deeper understanding of these current insurance market dynamics will help companies make informed decisions about their insurance programs and risk management strategies.
This facts is intended for informational purposes only and should not be considered as financial or legal advice. Consult with a qualified insurance professional for specific guidance tailored to your situation.