January 2023 Commercial Insurance Premium Renewal Trends
In January, the U.S. commercial insurance landscape experienced elevated premium renewal rates, indicating a trend towards moderation, as revealed by the latest data from the Ivans Index. This index, which assesses premium renewal rates monthly, highlighted increases in commercial auto, business owner's policy (BOP), general liability, commercial property, and umbrella policies, while Workers' Compensation remained declining. Most lines showed decreases in renewal rate changes month-over-month, except for umbrella policies.
Analysis of Renewal Rate Changes
Detailed analysis indicated that commercial auto renewal rates averaged 5.62%, decreasing from December's 6.46%. BOP experienced a rate change average of 6.89%, down from 7.58% the previous month, while general liability also averaged 6.89%, declining from 7.52% in December. Commercial property saw an easing to 7.22% from 8.34%. Umbrella policies were an exception, with a slight increase from 10.07% in December to 10.47% in January. Workers’ Compensation experienced a deeper decline, with rates dropping to -2.17% from December's -1.77%.
Market Influences and Trends
Despite the slowdown, renewal rates for property and liability policies remain above pre-hard-market norms, suggesting that the market is in a corrective phase rather than reverting to softer conditions. Umbrella coverage continued its resilience with double-digit rate changes, reflecting scrutiny on excess liability and severity issues. Workers’ Compensation sustained its soft market conditions, emphasizing a consistent trend of rate decreases.
Market analysts attribute the persistence in commercial property rates to high reinsurance costs, substantial catastrophe losses, and heightened construction and repair expenses. Social inflation and litigation trends heavily influence liability and umbrella lines, especially in sectors like trucking, construction, and habitational real estate. Contrarily, favorable loss histories and fierce competition contribute to the downward pressure on Workers’ Compensation pricing.
Regional and Sectoral Variations
Regionally and sectorally, brokers have reported variations, with catastrophe-prone properties, fleet-heavy auto businesses, and high-risk liability categories facing increased pricing pressures. In contrast, sectors exhibiting strong performance and lower risk have encountered milder rate hikes. This suggests varied impacts of regulatory compliance and risk management strategies across different industries.
Outlook for the Insurance Industry
For agents and brokers, the January data indicates that while clients are challenged by significant premiums, the peak of rate increases may be receding in segments like commercial property, BOP, and general liability. However, the ongoing substantial hikes in umbrella rates mean insureds remain concerned about total risk costs and renewal strategies as they navigate toward 2026. Carriers and Managing General Agents (MGAs) continue finding value in underwriting discipline, although competition could gradually resurface in some areas.
Looking forward, industry participants are carefully observing renewal cycles to assess whether January’s slowdown marks a long-term trend or a temporary fluctuation. Key influencers of future pricing include disaster activity and reinsurance renewals in 2026, alongside broader economic factors such as inflation and interest rates, which will continue affecting carrier and provider strategies in regulatory compliance.