How high will property and casualty insurance rates reach? Recent figures show that some lines are experiencing smaller price hikes, but property, auto, and liability rates continue to climb. Let’s take a look at the current state of the 2024 property and casualty insurance market and explore what this means for claims.
Q3 2024 Commercial and Personal Insurance Price Hikes
MarketScout says the personal lines composite rate was up by 6.75% in the third quarter of 2024. Personal articles lines were only up by 4.00%, but auto and homeowners insurance rates experienced steeper hikes – auto lines were up by 8.70%, homeowners under $1 million were up by 7.00%, and homeowners over $1 million were up by 8.00%.
Commercial lines saw similar increases. The Council of Insurance Agents & Brokers (CIAB) says premiums were up by 5.1% on average across all commercial property and casualty lines. However, commercial auto was up by 8.5% and commercial property was up by 7.9%. Additionally, although general liability rates were only up by 4.8%, umbrella insurance rates were up by 8.6%.
These price increases are not as steep as the peak hikes of recent years. Commercial property rates saw double-digit hikes throughout 2023, with an average increase of 20.4% in the first quarter of 2023. However, policyholders may be unhappy because they’re facing the combined effect of multiple rate hikes. Insurify says car insurance costs increased by 15% in the first half of 2024 and may increase by 22% by the time the year is over.
Some policyholders have reached a breaking point. According to USA Today, more drivers are ignoring state insurance requirements and dropping their coverage, whereas Newsweek says high insurance rates have prompted some homeowners to leave Florida.
The Impact of Recent Storms
MarketScout says the third-quarter rates do not reflect the full impact of recent hurricanes, meaning more rate hikes may be coming. The impact could be substantial. CoreLogic says Hurricane Helene resulted in approximately $4.5 billion to $6.5 billion in wind losses, $6 billion to $11 billion in insured flood losses, and $20 billion to $30 billion in uninsured flood losses – and that’s just one of the hurricanes to strike the U.S. in 2024.
Hurricanes have also damaged many cars. According to CARFAX, the 2024 hurricanes may have flooded up to 347,000 vehicles, including 120,000 by Hurricane Milton and 138,000 by Hurricane Helene.
What Does This Mean for Claims?
Insurance rates may seem like an underwriting issue, but underwriting and claims are inextricably linked, meaning claims professionals need to be paying attention, too.
There are two important takeaways for claims:
- Insurers still need to control losses. Rates are still rising because insurers are still trying to make up for the higher losses caused by fires, storms, inflation, litigation, and longer repair cycles. An efficient claims process reduces total claims costs.
- Claimant expectations increase alongside costs. The J.D. Power 2024 U.S. Auto Claims Satisfaction Study revealed a link between premium hikes and claims dissatisfaction, with policyholders who had experienced a rate increase before their claim expressing lower rates of claims satisfaction. An efficient and transparent claims process shortens claim cycles and improves communication with policyholders, resulting in happier claimants.
Is Your Claims System Up to the Task?
Insurers need a lot from their claims processes right now. The 2024 property and casualty insurance market continues to see rising rates in response to growing losses. An efficient claims process controls losses while providing value to policyholders. See how VCA’s claims management software can help.
