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Personal, Commercial Rate Increases Stabilize in Q2

The second quarter of 2022 saw personal lines rate increases stabilize at 5.16%. Commercial rates also stabilized at a composite increase rate of 5.91%. 
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personal, commercial rate increases stabilize in q2

U.S. personal lines rate increases stabilized at 5.16% during the second quarter of 2022, mirroring the 5.2% increase in the first quarter, according to MarketScout. Commercial rates also stabilized at a composite increase rate of 5.91% in the second quarter, comparable to the rate increase of the first quarter of 2022.  

While the overall composite rate for personal lines stabilized, insureds can expect to see rate increases as a result of inflation on home and auto repair prices, as well as the increased value of fine art, collectibles and jewelry, according to MarketScout. Additionally, hurricane season will impact all lines of personal insurance in areas affected by catastrophe perils.

“The Council for Insuring Private Clients gathered in May 2022 with over 250 personal lines professionals sharing information and ideas," says Richard Kerr, CEO of MarketScout. “The consensus was to expect continued significant rate increases for all lines of personal insurance in areas affected by CAT perils."

In the second quarter, homeowners for homes under $1 million rose by 5% while homeowners for homes over $1 million increased 7.3%. Auto rates rose by 3.7%.

Meanwhile, cyber liability rates experienced the largest increase, up 21.3% in the second quarter of 2022 from 19.7% in the first quarter. Umbrella rates also continued to increase, up 8.7% in the second quarter compared to 9.7% in the first quarter.

Here is a summary of the second quarter of 2022 rates by coverage class:

Coverage ClassPremiums
Commercial property
Up 8.3%
Business interruptionUp 7%
Business owners policyUp 6%
Inland marineUp 3.7%
General liabilityUp 5.3%
Umbrella and excessUp 8.7%
Commercial autoUp 9%
Workers compUp 1%
Professional liabilityUp 5.6%
Directors & officersUp 8.3%
Employment practices liabilityUp 5%
Up 2%
CrimeUp 1.7%
SuretyUp 1.7%

Medium-sized accounts—$25,000 to $250,000 in premium—experienced the largest rate increase of 7% in the second quarter of 2022, while overall the transportation industry continues to deal with the highest rate increases of 8.7%.

By Industry Class
Up 5.3%
Up 6.3%
Up 6%
Up 8.3%
Public entity
Up 5%
Up 8.7%
Up 4.3%

“Mother Nature and litigation heavily impact rate increases, but as we all know, we can't realistically control either," Kerr said. “Hurricane season is upon us and soon to be followed by wildfire season. If we have big events, the increase in property rates will come quickly." 

“Inflation can create a need for rate increases, so we may see that impact over the next four quarters," he noted. “As for rate decreases, it's possible higher interest rates could provide insurers with additional investment income which could moderate rate decreases, especially on long tail business."

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

Thursday, July 14, 2022
Commercial Lines