Alera Group: Personal Insurance Outlook ‘Discouraging’

Unprecedented industry losses and unprofitability in homeowners and auto insurance will significantly impact pricing and availability in 2024, especially in catastrophe-prone areas and states with challenging regulations, Alera Group forecasted in a December study.

In its 2024 P&C Market Outlook, the national insurance and wealth services firm said “the outlook for personal insurance is discouraging.” Alera shared survey findings showing that average pricing is anticipated to rise in most insurance lines and capacity is expected to improve in some lines while becoming more limited in others.

“In comparing 2024 projections to 2023, there is an increase in the percentage of markets that see improved availability in commercial property, general liability, umbrella/excess liability and medical malpractice,” the report said. “A significant trend worth noting is the shrinking availability in personal lines/private risk, where 40% of respondents see the market as becoming more limited.”

Related: US Personal Lines Outlook Continues to Be Negative: AM Best

Alera surveyed insurance company partners and wholesale intermediaries in the third quarter of 2023 to compile the report. They were asked to assess how they see conditions in the year ahead based on four factors: pricing, availability of coverage, capacity and underwriting scrutiny.

Key survey findings are listed below.

• Prices Rising: Buyers will likely see price increases in all lines except public and private directors and officers liability (D&O) and workers’ compensation. Markets anticipate the most significant rate increases (10% to 15%) will be in commercial property, commercial auto and personal lines.
• Varying Capacity: More than 20% of respondents see capacity increasing in public and private D&O, environmental liability, surety bonds and workers’ compensation. Notably, 47% of respondents anticipate a decrease in personal lines capacity, while 21% see capacity decreasing in commercial auto, and 33% anticipate a capacity drop in commercial property. More than 20% also see capacity decreasing in environmental liability and medical malpractice lines.
• Stricter Underwriting: Underwriters will continue to be selective in the accounts they write. Sixty percent of participants anticipate more rigorous standards in personal lines, and 57% anticipate tighter underwriting requirements for commercial property. Respondents also anticipate stricter requirements in commercial auto (32%), medical malpractice (33%), umbrella/excess liability (46%), general liability (18%) and cyber (12%). Requirements are expected to ease around private and public D&O, employment practices liability, surety bonds and workers’ compensation.

“The dynamic shifts detailed in our Property and Casualty Market Outlook underscore the need for a high-level risk management strategy and executive-level engagement in navigating the complexities of the insurance landscape,” said Mark Englert, Alera Group executive vice president and P&C practice leader. “As we anticipate challenges, particularly in the face of projected price increases in key areas such as commercial auto and commercial property, our unwavering commitment is intensified.”

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