Softening rates are now prevalent in many commercial lines segments in Canada, and not just D&O and cyber lines, according to Applied Systems’ 2024 Q3 Premium Rate Index.
Once a hard market dominated by rate increases, withdrawn capacity, and tightening terms and conditions, the peak of the rate increases post-pandemic appears to have been reached, and rate increases in commercial lines are starting to fall.
Overall, Canadian commercial insurers’ rate increases in 2024 Q3 were up an average of 5.52%, down from an increase of 7.27% during the same period last year.
“Compared to the same period in 2023, the results showed a year-on-year decrease in premium renewal rates, indicating a continued trend of softening rates,” says Steve Whitelaw, senior vice president and general manager of Applied Systems Canada.
Applied’s Index analyzes 22,000 data transactions per quarter. Quarter over quarter, average renewal rate changes in 2024 Q3 varied across all lines of the most commonly placed commercial lines categories in Canada.
“Business and professional services, hospitality services and real estate experienced [rate] decreases [compared to 2024 Q2], while construction and retail services experienced increases compared to last quarter this year,” the report observes.
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But compared to the same time last year, all major commercial lines saw decreased premiums. Year-over-year rate drops in each of these business lines are as follows:
Business and Professional Services
- 2022 Q3: Average premium rate increase of 8.07%
- 2023 Q3: Rate increase of 6.27%
- 2024 Q3: Rate increase of 5.3%
Construction, Erection and Installation Services
- 2022 Q3: Average premium rate increase of 9.85%
- 2023 Q3: Rate increase of 7.8%
- 2024 Q3: Rate increase of 5.36%
Hospitality Services
- 2022 Q3: Average premium rate increase of 10.4%
- 2023 Q3: Rate increase of 8.11%
- 2024 Q3: Rate increase of 5.77%
Real Estate Property
- 2022 Q3: Average premium rate increase of 7.76%
- 2023 Q3: Rate increase of 7.24%
- 2024 Q3: Rate increase of 5.32%
Retail Services
- 2022 Q3: Average premium rate increase of 9.53%
- 2023 Q3: Rate increase of 7.73%
- 2024 Q3: Rate increase of 7.53%
Feature image courtesy of iStock.com/filo
