February Commercial Insurance Renewal Rates Moderation

According to the most recent Ivans Index data, February observed a moderation in premium renewal rate changes for U.S. commercial insurance buyers across most major lines. Although adjustments signify some relief, the market still exhibits features of a hard market as renewal rates remain positive across all lines except for workers' compensation.

The Ivans report highlights year-over-year increases in average premium renewal rates for commercial auto, business owners' policy (BOP), general liability, commercial property, and umbrella insurance. Workers' compensation was the only major line to witness a decrease over the same period, with the month-over-month pace of change decelerating in most segments.

The highest average renewal rate change was seen in umbrella insurance, at 8.84%, though this reflected a decrease from January. Brokers note, however, that excess casualty remains under close watch due to social inflation, substantial jury awards, and liability exposure, even with improved capacity since the peak of the hard market.

Commercial property insurance recorded a renewal rate increase at 7.05%. Although slightly lower than January’s 7.22%, this continues an elevated pricing trend driven by rising repair and replacement costs, increased reinsurance expenses, and frequent U.S. catastrophe losses. Brokers indicate challenges in property account renewals, emphasizing valuation, deductibles, and sublimits alongside rate changes.

BOP exhibited an average renewal rate change of 6.81%, suggesting that small commercial insureds are still experiencing cumulative rating adjustments despite competitive carrier environments in high-performing segments. Meanwhile, general liability saw a 7.01% renewal rate change, with underwriters exercising caution in light of U.S. litigation trends, jury behavior, and social inflation.

The renewal rate for commercial auto decreased to 5.18% from January's 5.62%, indicating that the peak of the rate cycle may have passed for certain risks. However, ongoing factors such as medical inflation, parts, and labor costs continue to affect claim frequency and severity, particularly in the trucking sector, keeping an underwriting focus on fleet safety, telematics, and driver quality critical.

Workers' compensation stood out as a softer line with an average renewal rate change of -1.43% in February. Although this decrease is smaller than January's -2.17%, pricing pressure continues due to strong underwriting profitability and favorable loss trends. The Ivans Index, compiling data from over 120 million transactions, suggests that while some lines might have surpassed the hard market peak, challenges remain, especially in property and excess casualty, where elevated average rates persist. This data serves as a benchmark for brokers to manage client expectations, signaling that despite some stabilization, most commercial lines, excluding workers' compensation, are experiencing upward rate trends.