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Property and casualty insurance buyers should expect hard-market conditions for another two years and possibly longer, according to one industry expert.
During a January webinar hosted by Travelers, Robert Hartwig, a professor at the University of South Carolina and director of its Risk and Uncertainty Management Center, said, “the hard market has some legs, and I’d say [it will continue] at least through 2024 and potentially beyond.”
A hard insurance market is when there is high demand for insurance and a low appetite from insurers to provide coverage.
Recent surveys indicate staying power for the hard market conditions.
According to Marsh’s Global Insurance Market Index, commercial P/C price increases slowed in the fourth quarter of 2022. Still, there was an average 4% increase, marking the 21st consecutive quarter of composite price increases.
In the U.S., insurance buyers saw an average 3% increase across all P/C lines in Q4, with property pricing jumping 11%.
One positive area for buyers was directors and officers (D&O) liability insurance. D&O pricing for publicly traded companies declined by 14% in Q4, compared to a drop of 9% in Q3, Marsh reported. Aon Financial Services also reported a double-digit D&O decline of 17.8% in Q4.
A significant factor in the recent decline of D&O prices was a drop in the number of filed securities and class actions in the U.S.
However, in an Allianz report on D&O insurance insights, the insurer warned that conditions could change as economic uncertainty looms.
“The likelihood that a public company will be sued in a securities class action increases when financial performance is poor, a company’s share price drops or there is a risk of bankruptcy,” Allianz wrote.
According to Mr. Hartwig, the current hard market has lasted about four years. And problems in the tort environment will continue to affect general liability, product liability, and commercial auto.
