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Hurricane Ian Drives Personal, Commercial Rate Increases

Hurricane Ian is expected to impact rates as capacity is restricted even further in Florida and other wind-exposed coastal states.
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hurricane ian drives personal, commercial rate increases

The U.S. commercial lines composite rates increased 5.28% during the third quarter of 2022, below the 5.91% increase during the second quarter of 2022, according to MarketScout. Personal lines composite rates also increased 4.58% during the third quarter of 2022, less than the 5.16% increase in the second quarter of 2022. 

However, any hope of personal lines rate relief ended after Hurricane Ian, a category 4 storm, made landfall on the southwestern coast of Florida, covering large parts of the south east with torrential rain and winds of up to 150 miles per hour.

Last week, CoreLogic said insured losses from Hurricane Ian could be as much as $53 billion. The data and analytics company said new analysis shows total flood and wind losses from Hurricane Ian are between $41 billion and $70 billion, up from original estimates made a week ago.

Hurricane Ian is expected to impact the personal lines sector as capacity is restricted even further in Florida and other wind-exposed coastal states.

“High value homes are experiencing more aggressive rate increases," said Richard Kerr, CEO of MarketScout. “This is largely because, on a composite national basis, more high value homes are located in catastrophe prone areas of the U.S., which naturally are assessed higher rates."

“Hurricane Ian is going to be a huge loss for insurers covering properties in Florida," Kerr continued. “Excluding coverage for flood and storm surge, estimates are from $25 to $45 billion. Including flood claims, the total will most likely surpass $100 billion. Rates will be up dramatically in Florida for the foreseeable future."

Further, personal auto rates were up slightly from the second quarter of 2022 while personal article rates moderated slightly from the second to third quarter.

Personal lines rate increases during the third quarter of 2022:

Homeowners under $1,000,000 valueUp 4%
Homeowners over $1,000,000 valueUp 6%
AutomobileUp 4.3%
Personal ArticlesUp 4%

Meanwhile, several other factors influenced the commercial lines rate increase during the third quarter, including a 23% increase in cyber liability rates as well as a 7.67% increase in property rates.

Significant rate increases were also seen in commercial auto, which experienced a 7.67% increase in rates; umbrella coverage, which experienced a 7% increase; and directors & officers liability, which saw a 7% increase in rates during the third quarter. 

Notably, “we are seeing softening in the D&O professional sector as additional markets expand available capacity," Kerr says. “Cyber rates are still increasing significantly despite additional capacity."

Commercial lines rate increases during the third quarter of 2022:

Coverage ClassPremiums
Commercial propertyUp 7.67%
Business interruptionUp 6.3%
Business owners policyUp 5%
Inland marineUp 4%
General liabilityUp 6%
Umbrella and excessUp 7%
Commercial autoUp 7.67%
Workers compensationUp 0.3%
Professional liabilityUp 5.7%
Up 7%
Up 4.3%
FiduciaryUp 1%
CrimeUp 1%
SuretyUp 1%
Cyber liability Up 23%

Overall, the transportation industry continues to experience the highest rate increase of 8% during the third quarter.

By Industry ClassPremiums
ManufacturingUp 5%
ContractingUp 5.3%
ServiceUp 5.67%
HabitationalUp 6%
Public entityUp 4%
TransportationUp 8%
EnergyUp 5%

MarketScout is a national MGA and wholesale broker specializing in assisting agents in placing high net worth personal lines business.

Thursday, November 3, 2022
Commercial Lines