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Uncertainty Fuels Insurance Rate Hikes and Underwriting Scrutiny

By December 19, 2022No Comments

Third annual study from Alera Group predicts 2023 Property and Casualty market conditions

A new study forecasting 2023 market conditions in the Property and Casualty Insurance industry reveals that uncertainty related to the economy, inflation, catastrophes and court-related claims is contributing to tighter underwriting guidelines and widely varying price increases. Findings also show that market capacity could be reduced, leading to increased emphasis on layered insurance coverage and clients assuming more risk.

The 2023 Property and Casualty Market Outlook is the third annual nationwide study by Alera Group – a top independent, national insurance and wealth services firm – to gauge market conditions and predict trends in pricing, availability of coverage, capacity and underwriting scrutiny for the upcoming year. The report analyzes Property and Casualty (P&C) Insurance markets by lines of coverage and by the primary industry sectors Alera Group serves.

Key findings from the Market Outlook include:

  • Rising prices vary significantly: Most coverages have risen at more modest rates than the previous year, but there are significant variations between lines of business. Workers’ Compensation is projected to have the smallest pricing increase, at 0.3%, while Cyber Liability is the highest, at 15%.
  • Capacity becomes more restrictive: In the aftermath of Hurricane Ian, capacity will likely be limited – especially for buyers of property insurance in catastrophe-prone areas. This will result in lower policy limits, leading to more layered insurance solutions.
  • Rigorous underwriting persists: Underwriters are looking for the “best of the best” as they become increasingly selective. With potential limitations on capacity, underwriters will be discerning as to where and how to use capacity. Furthermore, insurers continue to rely on reinsurance to expand their capacity, stabilize underwriting results and provide catastrophe protection. Indications are that insurers will face challenging reinsurance renewals in 2023.

“In most lines of business, 2023 will still be a seller’s market, making it incumbent on insurance buyers to position their organizations as effectively as possible,” said Mark Englert, Executive Vice President and Property & Casualty Practice Leader at Alera Group. “The 2023 Property and Casualty Market Outlook not only reveals the biggest trends impacting our industry but also provides strategies for navigating a competitive marketplace. Submissions need to stand out and make it as easy as possible for underwriters to say yes. Working with an unbiased broker can help clients evaluate all options and choose the move comprehensive plan.”

The 2023 Property and Casualty Market Outlook gathers input from Alera Group’s insurance company partners, wholesale intermediaries, subject matter experts and Alera Group team members throughout the country. The full report is available for download on the Alera Group website. Contact a local Alera Group office or email info@aleragroup.com with questions and requests for assistance.

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Justin Foa

President & CEO

Foa & Son

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