April 2023 Commercial Insurance Premium Trends and Analysis

In April, commercial insurance buyers in the U.S. faced increased premium renewal rates across major lines, with the exception of workers' compensation, which saw a decline, according to the Ivans Index. The data highlighted varied month-over-month rate changes, with some classes experiencing slight increases, while others showed reductions.

Commercial auto premiums rose by an average of 5.24%, slightly higher than March's rate of 5.05%. Business Owner’s Policy (BOP) renewals increased by 6.43%, a small decrease from March's 6.51%. General liability rates decreased to 5.70% from 6.64%, showing notable easing. Commercial property rates remained stable at 6.24%, while umbrella insurance renewals saw the highest increase at 8.27%, albeit down from 8.76% in the previous month. Workers’ compensation rates fell by 1.35%, improving over March’s 1.60% decline.

These figures suggest a firm pricing trend in the market; however, there are signs of a decelerating upward trend in several casualty lines. This aligns with broader stabilization trends following periods of rate hardening due to loss-cost inflation, social inflation, and significant catastrophe losses.

The persistent rate increases in general liability and umbrella lines indicate ongoing concerns over severity trends and large jury awards. However, month-over-month reductions may signal growing competitive pressure, particularly on well-performing accounts. The slight decrease in BOP rates hints at increased competition for smaller commercial risks.

Commercial auto and property rates experienced slight increases in April. Auto insurers remain cautious due to inflationary pressures on parts, labor, and the frequency of large losses. Property insurers are focused on managing exposure to secondary perils, supply-chain-driven repair costs, and reinsurance expenses. Even modest rate increases indicate that capacity providers are not yet ready to relax underwriting terms.

Overall, the market is transitioning from a consistently hard cycle to a more differentiated environment, where pricing is increasingly influenced by class, geography, and individual risk profiles. The ongoing decline in workers’ compensation rates, with a 1.35% reduction, contrasts with other casualty lines, highlighting potential cross-line portfolio management strategies.

With the moderation of rate increases in major casualty lines and persistent high input costs, such as reinsurance and claims inflation, opportunities to trade price for volume remain limited. Insurers are expected to differentiate more rigorously between well-managed and underperforming risks, using data and analytics to protect their margins. Brokers may find opportunities in accounts with favorable loss histories, particularly within general liability, BOP, and umbrella segments, despite challenging negotiations for property-heavy portfolios and auto fleets with poor loss experiences.