The property and casualty insurance market is experiencing significant changes and challenges I have included a brief summary below of some of the current conditions.
Market Growth: The global property & casualty insurance market is projected to grow from $1,696.75 billion in 2022 to $1,843.14 billion in 2023, at a compound annual growth rate of 8.6%. This expansion marks the first time in 21 years that the P&C business has seen double-digit growth in direct premiums written.
Rate Increases: There has been a moderate increase in commercial property and casualty composite rates, which rose by about 5% in the first quarter of 2023. However, properties exposed to catastrophes and those with poor loss history or poor risk quality are seeing more substantial rate increases, ranging from 25% to 150% in the first half of 2023.
Reinsurance Rates: The property catastrophe reinsurance rates have notably increased by 37% in January 2023 renewals, representing the largest increase since 1992. This substantial hike in reinsurance rates is expected to impact primary rates as well. Just to put this into perspective I was 3 years old in 1992.
Challenges and Changes: The market is being reshaped by a variety of factors, including an increased frequency of severe claims, recession uncertainty, social inflation concerns, persisting COVID-19 obstacles, cybercrime trends, and catastrophic natural disasters. These factors are causing significant shifts in the market dynamics and created a very uncomfortable circumstance for insurance companies.
Policyholder Surplus: In the U.S., the property casualty insurance industry’s policyholder surplus declined by 9.4 percent in 2022. This decline might have implications for the industry’s capacity to underwrite new business and absorb large losses.
The property and casualty insurance market is undergoing substantial growth and facing numerous challenges. The industry is adjusting to increased claims, changing risk landscapes due to natural disasters and cyber threats, and significant rate increases, especially in areas prone to catastrophes. This dynamic environment indicates a period of transition and adaptation for the P&C insurance sector. Consumers will continue to experience rate changes for the foreseeable future as the industry adapts to the new normal.
