Interest rates continue to drive strong investment income for insurers. Nevertheless, the effects of social and economic inflation continue to accumulate, adding pressure to insurers’ liability reserves and pricing. How much this impacts 2024 remains to be seen, but additional scrutiny around risk selection and program structure is expected. In this dynamic environment, tailored analytics and creative program design are now table stakes for insurance buyers.
Commercial insurance market remains in balance
More than a few observers have described the U.S. in recent months as having a “Goldilocks” economy that is not too hot, not too cold, but just right. Most business leaders remain cautiously optimistic about the outlook for 2025, and fears of a recession appear to be fading. Conditions remain competitive for insurance buyers in many lines, including property, workers’ compensation, directors and officers liability, and cyber insurance, although third-party liability loss trends continue to trouble insurers. Still, a sense of fragility lingers for both the economy and the commercial insurance market. While insurers demonstrate strong earnings, they are on alert for new developments related to natural catastrophes, geopolitics, and social inflation. For insurance buyers, key strategies including risk identification, optimization of policy structure and limits, consideration of alternative risk options, and implementation of advanced litigation strategies.