By Moselaunch 
U.S. Commercial Insurance Rates Rise Amid Rising Casualty Costs: A Q3 2024 Breakdown
Commercial insurance rates in the U.S. rose by 3% in the third quarter of 2024, driven largely by a surge in casualty costs. According to Marsh’s Global Insurance Market Index, U.S. casualty insurance experienced a substantial increase of 10%, marking the most significant quarterly rise since late 2020. Excluding workers’ compensation, casualty rates soared by 14%, signaling the escalating costs impacting various sectors and highlighting the strain on businesses managing risk.
Key Drivers of Rising Casualty Rates
The rise in casualty insurance rates has been fueled by multiple factors. Auto liability remains a significant challenge, driven by a combination of high jury awards and the increasing cost of repairs. Marsh reports that loss cost trends are outpacing rate increases, especially in umbrella and excess liability lines, which have been affected by higher frequencies and severities in both auto and general/product liability claims across all industries.
Businesses with positive claim histories and low hazard profiles have also faced considerable increases, with rates on umbrella insurance programs rising by 10% to 15%. For high-risk accounts, rate hikes have exceeded 30%, demonstrating the strain on sectors facing complex and costly claims.
General Liability Increases Across Key Sectors
General liability coverage has also been impacted, though some segments have seen modest increases. Sectors such as real estate, hospitality, education, and public entities faced steeper rises in the third quarter, as insurers continue to adjust rates based on claim trends and risk exposures specific to these areas. For organizations in these fields, the adjustments underscore the importance of proactive risk management and effective claims handling strategies.
Commercial Property Rates and Market Trends
The commercial property market presented a different picture, with rates decreasing by 1% in Q3, reversing a 2% increase from the previous quarter. This dip was largely attributed to increased capacity within the market, as more competitors entered, enhancing availability across various industries and coverage layers. Policy terms for commercial property have remained mostly stable, though experts are keeping an eye on potential impacts from the recent hurricane season. Marsh is working with clients and communities to provide support in the wake of these natural disasters, which could influence rates in upcoming quarters.
Adjustments in Financial and Professional Insurance Lines
Financial and professional insurance lines continued to experience rate reductions, maintaining the trend from the second quarter. In particular, directors and officers (D&O) liability rates saw a 4% decrease in Q3, following a 5% decline in Q2. As inflation eased in 2023 and 2024, the focus on valuations has lessened, offering some relief to these sectors. Companies have responded by exploring alternatives, including increased retentions, captive insurance arrangements, and parametric insurance solutions.
Strategic Considerations for Businesses
The fluctuating insurance landscape in 2024 underscores the need for businesses to take a strategic approach to risk management. Marsh notes that clients are increasingly examining options like captive and parametric insurance, which can offer greater flexibility and control over their coverage needs. For companies facing steep rate hikes in casualty and general liability lines, balancing increased retentions with innovative solutions may offer cost-effective pathways for long-term risk mitigation.
The outlook for commercial insurance rates remains dynamic, with factors such as jury awards, repair costs, natural disaster impacts, and industry-specific claim trends continuing to shape the market. As companies navigate these challenges, Marsh and other industry leaders remain committed to supporting clients with tailored solutions and proactive guidance.