U.S. property insurance rates dropped 4% in Q4 2024, a sharper decline than the 1% recorded in the previous quarter. Increased insurer capacity, driven by strong financial results over the past three years, contributed to the trend. Casualty insurance rates rose 7%, with an 11% increase when excluding workers’ compensation. The U.S. property & casualty market in 2025 to show improved underwriting results.
Stable reinsurance structures and cost reductions also supported lower rates. Insurers showed greater underwriting flexibility, offering more favorable terms on sub-limits, coverage definitions, and natural catastrophe deductibles.
The Global Insurance Market Index is proprietary measure of commercial insurance rate changes at renewal. Below are insights into the US insurance market. Beinsure analyzed the Marsh’s report and highlighted the key points.
Key Highlights
- Property Insurance Rates Decline. U.S. property insurance rates fell 4% in Q4, with high-risk areas seeing greater reductions. Increased capacity and competition contributed to the shift.
- Casualty Insurance Costs Rise. Auto liability and jury verdicts pushed casualty rates up 7%, with umbrella and excess liability seeing hikes between 9% and 20%.
- D&O Insurance Leads Financial Lines Decline. D&O liability rates fell 5%, while errors and omissions (E&O) increased 1%. Insurers reassessed pension risk transfer exposures.
- Cyber Insurance Market Expands. Rates dropped 5%, with insurers offering greater coverage. Cyber claims surpassed 2,000 cases, highlighting ongoing security concerns.
- Coverage Restrictions Widen. Exclusions for PFAS, biometric data, cyber risks, and high-risk premises expanded, reflecting growing insurer caution amid rising losses.
US composite insurance rate change
US Property Insurance Rates Decline as Insurer Competition Increases
Property insurance rates fell 4% in Q4 2024, a steeper decline than the 1% drop in the previous quarter. Increased insurer capacity and competition, driven by strong financial performance over the past three years, contributed to the shift. Cost reductions and stable reinsurance structures also supported the trend (see TOP 50 P&C Insurance Companies in U.S.).
Insurers showed more underwriting flexibility, offering favorable adjustments on sub-limits, coverage definitions, and natural catastrophe deductibles.
Clients in high-risk regions, including the Gulf of Mexico, the Atlantic coast, and California, saw larger rate reductions due to increased capacity and new capital inflows. Insurer scrutiny of valuation and COPE data eased compared to prior years.
US property insurance rate dynamics
Clients with higher loss activity and weaker submission quality faced less favorable renewal outcomes. Meanwhile, insurer appetite increased in sectors such as warehousing, food and beverage, and technical risk, which had experienced sharp rate hikes over the past five years.
US businesses closely examined insurance costs, weighing self-insurance and alternative risk transfer options. Despite softening rates, the market remains sensitive to loss events. The ongoing Los Angeles wildfires are expected to impact aggregate catastrophe losses in 2025.
US Casualty Rate Increases Driven by Auto Liability and Jury Verdicts
Casualty insurance rates rose 7% overall, with an 11% increase when excluding workers’ compensation.
Workers’ compensation remained a key focus for insurers, though concerns persisted over growing reserves and rising medical costs. Auto liability continued to strain profitability, driven by larger jury verdicts and increasing auto physical damage costs.
General liability rates stayed relatively stable, averaging a 3% increase. However, industries such as real estate, hospitality, and public entities saw steeper hikes due to higher loss activity.
Coverage restrictions also expanded, with exclusions for per- and polyfluoroalkyl substances (PFAS), biometric data, and cyber risks. Real estate and hospitality organizations faced additional exclusions related to sexual abuse, human trafficking, and assault.
US casualty insurance rate dynamics
The umbrella and excess liability market saw risk-adjusted rate increases of 15%, down from 21% in the prior quarter. Without changes in program structure, rates rose 9% for umbrella coverage and 20% for excess layers. Lead umbrella programs with strong loss histories and low-risk exposures saw increases between 12% and 15%.
Clients with unfavorable loss trends and high-risk exposure often faced pricing adjustments, changes to limits and coverage, and rate hikes exceeding 30%. Many turned to alternative program structures, including captives and structured deals.
Some insurers set individual risk capacity limits at $15 mn, with a median of $10 mn, due to worsening litigation trends. This shift affected even jurisdictions previously considered favorable.
Insurers also moved away from concentrating capacity within a single tower, responding to an uptick in severe claims, especially in auto liability. For fleets exceeding 100 vehicles, several insurers increased auto attachment points.
Exclusions widened across various risks, including PFAS, biometric data, sexual abuse, endocrine disruptors, and geopolitical threats. Premises exposures, previously seen as low-risk, are now producing worse-than-expected claim outcomes, further tightening underwriting standards.
US Financial and Professional Lines: D&O Leads Rate Decline
Financial and professional lines rates dropped 3% in Q4, with directors and officers – D&O insurance liability seeing the largest decline at 5%. D&O pricing remained stable, with single-digit decreases in both primary and total program rates.
The gap between primary and excess layer pricing narrowed. Some insurers either exited renewals or reduced capacity, citing an inability to maintain current premium levels.
Fiduciary insurance rates remained mostly unchanged. Insurers faced lawsuits applying Employee Retirement Income Security Act (ERISA) theories from excessive fee litigation in retirement plans to health plans and pharmacy benefit managers (PBMs). Ongoing ERISA 401(k) excessive fee litigation, including costs for defense, settlements, and plaintiffs’ fees, continued to drive insurer losses. Improper investment claims became a notable issue.
US financial and professional insurance rate dynamics
Retention levels remained a concern. Insurers generally required minimum retentions between $1 mn and $10 mn for larger plans, reflecting worries about rising defense costs and expert fees. Recent lawsuits related to pension risk transfer and pension calculations pushed underwriters to reassess defined benefit plans.
Errors and omissions (E&O) rates increased 1%, while financial institution (FI) rates fell 2%.
Cyber Insurance Rates Decline as Market Capacity Grows
Cyber insurance rates fell 5% as market capacity remained abundant. Both primary and excess programs had ample availability, with additional capacity expected in 2025 (see TOP 15 U.S. Cyber Insurance Companies & Groups).
Organizations with strong cybersecurity measures used premium savings to increase coverage limits, lower retentions, and shorten waiting periods. In 2024, around 20% of U.S. clients opted for higher limits.
Claim volumes rose, with more than 2,000 cases reported in the U.S. These incidents stemmed from privacy breaches, supply chain disruptions, and ransomware attacks. While average ransom demands increased, fewer companies paid ransoms compared to previous years (see Cyber Insurance Market Outlook for 2024-2034).
Cyber risks continue to shift. Key concerns include maintaining strong security controls, strengthening resilience against ransomware, managing aggregation and third-party risks, understanding the effects of generative AI, and adapting to new privacy regulations.
FAQ
Increased insurer competition, stable reinsurance structures, and strong financial performance over the past three years led to a 4% decline. High-risk regions saw larger reductions due to rising market capacity.
Auto liability losses, larger jury verdicts, and rising medical costs contributed to the increase. General liability rates also rose, with sectors like real estate and hospitality facing sharper hikes.
Exclusions expanded for PFAS, biometric data, cyber risks, and premises exposures. Some insurers also limited individual risk capacity to $15 mn, with a median of $10 mn, due to litigation concerns.
D&O liability rates fell 5%, with stable primary and excess pricing. Fiduciary insurance remained unchanged, but lawsuits related to retirement plans and pension calculations raised insurer concerns.
Rates dropped 5% due to increased market capacity. Companies used savings to expand coverage, though cyber claims surpassed 2,000 cases, driven by ransomware, privacy breaches, and supply chain disruptions.
Sectors like warehousing, food and beverage, and technical risk attracted more insurer appetite after experiencing steep rate hikes over the past five years.
Insurers are reducing concentration within single towers, increasing auto attachment points, and reassessing defined benefit plans. Lead umbrella rates ranged from 12% to 15%, while excess liability increased by 20%.
