US property insurance rates in E&S markets are slowing and should stabilize amid increased market capacity, but would need another full year of sustained profits in order to “truly” soften, analysts at RT Specialty have claimed.
“We are starting to see some rate increases begin to taper off as a modest amount of additional capacity starts to flow into the market,” analysts wrote in the 2024 RT Binding Authority market update.
Rates will head into a period of stabilisation barring an active 2024 hurricane season, with insurers focusing more on risk differentiation and pricing accuracy, RT Specialty now believes.
But no major risk of rate downside is yet visible. “We believe another year of strong, sustained profits will be necessary before the property market truly begins to soften.,” analysts wrote.
Additional capacity in the E&S property space follows a calmer set of reinsurance renewals that created capacity which carriers have deployed in the mid-Atlantic and northeast, and “to a smaller extent” in the southeast and Gulf regions, RT Specialty noted.
Focus has extended well beyond coastal hurricane risks and spread to severe convective storm risks and terms and conditions are being adjusted apace, RT Specialty noted.
In liability lines, carriers are expected to continue to tighten underwriting guidelines and raise rates to buffer against adverse impacts on reserves from past long-term liability trends, analysts believe. Reserve development in liability should be “an interesting story to watch as we move through 2024.”
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