A hard property catastrophe reinsurance market is expected to affect commercial insurance lines pricing, according to Goldman Sachs.

With the latest incremental inflation, pricing in property lines of business are likely to stop decelerating or potentially begin to accelerate again, as it began seeing some evidence of this in the latest pricing surveys from Ivans & Marketscout.

It expects commercial pricing to continue to show modest deceleration with the potential for pricing to come in flatter QoQ as inflation impacts property lines of business.

Ultimately, experts at Goldman Sachs believe there will start to be some divergence between lines like commercial property and commercial auto where there will likely be some temporary re-acceleration of rate, particularly given the hardening property cat reinsurance markets.

Overall we expect that for most companies price will still be a bit above loss cost trends, though some will likely begin to see this dynamic shifting to price more in-line with loss costs as we saw at TRV last quarter.

Goldman Sachs

E&S lines will also be affected by the hardening of the property cat reinsurance market.

According to the firm – based on information suggested by the stamping office data from California and Texas – there may be more acceleration of rate QoQ, compared to the expected flat to deceleration in standard lines.

We view this being related to the property portion of these premiums being more high risk and seeing greater increases as the property cat reinsurance market has hardened.

Goldman Sachs