The property insurance market in 2024 is showing slight signs of improvement, but businesses are still facing challenges due to various factors. Denise Perlman, President of National Business Insurance at Marsh McLennan Agency, highlights the need for commercial property stakeholders to understand major insurance market trends to navigate industry complexities during this unique time. Marsh McLennan Agency recently published a report on commercial property trends for 2024, identifying three significant trends shaping the property insurance landscape: increased losses from secondary perils, rising reinsurance costs, and underinsured properties.
The rise in secondary catastrophe perils, such as flooding, hail, wind, freezing temperatures, and others, with little predictability, has impacted property portfolios. High-magnitude catastrophe losses, supply chain challenges, and rising inflation further complicate the landscape. Population growth in high-risk areas like coastlines and urban forests is becoming a major factor in loss trends, leading to significant rate increases ranging from 50% to 100% for those with significant exposures and sustained losses. Organizations facing catastrophe risk exposures and sustained loss activity throughout 2024 are likely to experience these rate increases.
Despite the challenges, the market is displaying enhanced stability for the first time in six years, with modest growth in investment and capital attributed to increased market capacity and carrier underwriting interest. While rates may decrease, conservative underwriting practices will persist as insurers adapt to the unpredictable frequency and severity of catastrophic storms and secondary perils throughout the year. Insurers have started changing their risk selection criteria, resulting in increased competition and urgency to quote new business for acceptable risks, with rate increases averaging 11% for larger risks in Q4 2023.
To navigate the commercial property insurance market effectively, policyholders can take several proactive steps. These include choosing knowledgeable brokers and partners who understand the market cycles and challenges, crafting cohesive underwriting submissions that highlight superior risk attributes and establish strong relationships with insurers, and implementing a seamless go-to-market timeline that starts well before the renewal process. By staying informed, proactive, and implementing effective strategies, commercial policyholders can navigate the complex property insurance market in 2024 and emerge more resilient. The key is to understand market trends and make informed decisions to mitigate risks and secure comprehensive coverage.
