Q2 Rate Increases Hold Steady: MarketScout

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Personal and commercial rate increases stabilized virtually across the board in the second quarter of 2022, according to MarketScout’s Market Barometer.

U.S. personal lines rates increased 5.16 % in the second quarter – close to the 5.2 % increase seen in the first quarter – driven by inflation on home and auto repairs and increased value of fine art, collectibles, and jewelry.

Meanwhile, MarketScout said U.S. property and casualty rates increased 5.91 % in the second quarter of 2022, virtually matching the rate increases of the first quarter.

Cyber rates continue to increase at a higher rate, up 21.3 % in Q2 from plus 19.7 % in Q1.

By industry classification, transportation is still being assessed with the highest rate increases at plus 8.7%.

Richard Kerr, CEO of MarketScout, said, “Mother nature and litigation heavily impact rate increases, but as we all know, we can’t realistically control either.”

He noted that hurricane and wildfire seasons may fuel additional commercial property rate increases if there is a big event.

“Inflation can create a need for rate increases, so we may see that impact over the next four quarters,” said Kerr. “As for rate decreases, it’s possible higher interest rates could provide insurers with additional investment income which could moderate rate decreases, especially on long tail business.”

Turning back to personal lines, Kerr said that at May’s meeting of the Council for Insuring Private Clients, the consensus was to expect continued significant rate increases for all lines of personal insurance in areas potentially impacted by catastrophe perils, said.

In CAT-prone Florida and California, where 40% to 50% rate increases are not unusual, premium increases and coverage restrictions will likely be among the measures taken to provide additional capacity.