PIA Market Trends Survey: Rising premium rates, other factors indicative of a hard market

November 1, 2023

Professional insurance agents may be aware that the insurance industry is amid a hard market. This means you also may have noticed that your insureds’ premiums have risen, and insurance coverage is more restricted, among other changes.

PIA Northeast conducted a survey with its members about these trends in the market. Across personal auto, personal homeowner and commercial liability premiums, roughly 50% of respondents to the 2023 PIA Market Trends Survey have seen increases in premiums.

According to those insurance agents who took the survey, commercial property premiums saw no change and even decreases—at 57% and 32%, respectively. However, renewal premiums have increased across the board, with roughly 80% of responders noting this trend across all these insurance lines.

In addition, those agents who took the survey report that underwriting has gotten stricter overall, from moderate to significant to extreme degrees, totaling 70% to 80%, again across these lines of business.

What does all this mean?

The findings of the 2023 PIA Market Trends Survey support the overall belief that the insurance industry is experiencing a hard market. Traditionally, hard markets have far-reaching effects. While insurance professionals, and their clients, may expect premium prices to increase, many don’t understand all the factors that cause the costs to rise. One of those big-cost factors is reinsurance.

How familiar are you with reinsurance? In Don’t shoot the messenger PIA Northeast Director of Government & Industry Affairs Bradford J. Lachut, Esq., discusses why the market is hardening with a section dedicated to reinsurance.

“Reinsurance is nothing more than insurance for insurance companies,” he wrote. “Insurance, at its base level, is a contract to transfer risk … a policyholder agrees to pay a premium to an insurance company to transfer the risk of paying for a future loss to said company. Reinsurance is the same concept.”

As reinsurance is a type of insurance, it also is affected by inflation and rate hikes. “There are now fewer reinsurance dollars to go around to insurance companies,” Lachut continues. “In turn, insurance companies will limit their exposure by being more selective in the risks they write, as well as how much they are charging for those exposures.”

Robert Mazzuoli, a senior director and analyst at Fitch Ratings, one of the major credit rating agencies in the United States, spoke with Reuters in September about the company’s expectations for the reinsurance market. By the company’s estimate, the hard market is expected to remain until 2025, where it will start to soften.

In the same article, Reuters also claimed that reinsurers were raising rates in response to “the COVID-19 pandemic, war, inflation and climate change-fueled natural catastrophes, boosting their profitability.”

All these scenarios create risks for insurers—which also create risks for reinsurers companies. An increased environment of risk may lead to increased reinsurance rates to cover potential damages, which then may lead to increased reinsurance premiums.

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PIA Market Trends Survey: Indications the hard market is causing a shift to E&S placement

Matt McDonough is PIA Northeast's writer, editor and content curator. Matt joined PIA Northeast in September 2023. Before that, he had been an editor for the online entertainment magazine Collider from 2021-23 as a copy editor for its lists section. Matt entered the world of journalism at his alma mater, SUNY New Paltz, writing and reporting for the college's student run newspaper, The New Paltz Oracle. He graduated from SUNY New Paltz with a Bachelor of Arts in English and a minor in Creative Writing in 2020.

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