Staying the course through a shifting insurance terrain
Introduction
In recent memory, navigating the insurance market has been similar to experiencing the peaks and valleys of a roller coaster ride, with the pricing and availability of coverage fluctuating as insurers search for stability. As we collectively make sense of how newer patterns may be indicative of future trends, anticipating what lies ahead with the insurance landscape sometimes feels like treading in the dark.
Yet at the onset of 2024, we looked into our crystal ball and predicted how the economic environment and trends in the business insurance, private insurance, and employee benefits markets might impact businesses and individuals, and what they could do to respond. With 2024 well under way, we are here to take stock on these predictions by examining how insurers continue to adapt to global events, economic developments, and claims patterns, and decoding what this means for the pricing, availability, and terms for coverage.
In the commercial risk and private risk space, some lines of insurance remain hardened, while other lines continue to see rate moderation and capacity. With employee benefits, employers remain focused on finding a balance between cost containment and offering robust benefits. Throughout this update, we discuss how these trends may impact businesses, individuals, and the insurance industry, while highlighting strategies and solutions that can help you mitigate risk, control costs, and achieve your goals.
As the market shifts, you can rely on our advisor and client experience teams to remain steadfast and dedicated to clients, working in partnership with you to find viable solutions that help you stay the course on the path toward protecting your now and your future. From business insurance to employee benefits, private insurance, or a combination of these needs, we will help you cut through complexity and fine tune your approach to risk management so that you can pursue your goals, confidently.
Commercial Risk
After years of responding and adapting to the fallout from a global pandemic, 2024 so far seems to be an inflection point for the commercial P&C market.
At the start of 2024, the commercial property and casualty (P&C) market showed early signs of stabilization, with a more orderly January 1st reinsurance renewal season indicating improved capacity and potential rate deceleration. Though this was certainly a positive development, we entered the year with a sense of cautious optimism. In spite of improvements for property reinsurance renewals, reinsurers demonstrated diminishing risk appetite for litigation exposures from casualty insurers in U.S. markets. Additionally, entrenched challenges, such as more frequent natural disasters, the economic environment, and geopolitical dynamics continued to loom over shifting insurance terrain.
These early developments have reached fruition as the year has progressed. Though certain lines, industries, and geographies remain challenging, overall market conditions are easing. While rate increases have decelerated and there is new capacity for certain lines, insurers are still taking a very stringent approach to underwriting by putting a magnifying glass on insureds’ ability to prevent, respond to, and rebound from potential loss scenarios. These more conservative underwriting practices could be the new normal moving forward as insurers look for ways to withstand the frequency and severity of losses. And though insurers are reaching rate adequacy, this does not necessarily equate to rate reversals.
With the market continuously shifting as a response to global events, risk trends, and loss patterns, investments in loss controls and risk mitigation are the north star for buyers, insurers, and insurance advisors to stay the course on the path toward resilience. And as your organization navigates the ebb and flow of the commercial P&C market, your advisor can help you achieve market awareness and implement strategies that help you positively impact the results you see from insurers.
Working in partnership with The Baldwin Group’s experts, you can receive guidance and insights so that you make informed decisions regarding your insurance program design and learn where you should make investments in loss controls.
And depending on your organization’s specific goals and challenges, we can also help you decide if and when alternative risk transfer solutions are your best option.
In the complete market update, we cover how the commercial P&C space continues to evolve in its search for equilibrium, and how you can create strategies that improve your risk resiliency.
Employee Benefits
Amid persistent economic uncertainty, labor issues, and higher-than-average inflation, escalating costs for health plans and pharmacy benefits continue to pose significant financial challenges for U.S. employers. As a result, finding sustainable ways to cut costs that can satisfy both organizational goals and employee priorities appears to be a key focus for employers.
Overall, interest is shifting in different health plan models along with innovative ways to manage pharmacy benefit costs. Lifestyle benefits are surging to meet ever more diverse employee priorities and worker engagement strategies are becoming more important for employers to reach optimal productivity and success.
In our complete market update, we re-examine a few of the key trends we predicted would impact the market earlier this year, look at what’s happening now, and offer practical insights about what it all means for employers as they move forward through 2024.
Private Risk
At the mid-year mark, the private risk P&C market continues to course correct in search of stability, with conditions remaining hardened. Fortunately for buyers, there are now some early signs of stabilization.
Reinsurance renewals at the outset of 2024 were significantly more orderly than the previous year, giving insurers more breathing room in their ability to deploy capital and take on risks. Reinsurance is insurance that insurers use when they have to cover significant loss events. Though the reinsurance environment is more stable, it does not mean that there will be rate reversals. This is because insurers are still acclimating to a new normal of sustained, high-loss patterns driven by weather events, inflationary pressures, litigation trends, and major global events.
Because of these loss drivers, insurers remain focused on improving their profitability and creating a monetary buffer in their books of business before writing more policies or offering rate reductions. While rate increases are showing nascent signs of deceleration, expect insurers to take a very stringent approach to underwriting and continue to ask questions that allow them to gauge how you can prevent, respond to, and rebound from potential loss scenarios. It is also important to note that your results in the market may vary greatly by coverage type and geographic location.
In spite of a challenging environment, buyers are finding ways to adapt by zeroing in on strategies that reduce the likelihood of losses and improve their insurance outcomes. The insurance market is always going to shift as a response to global events, risk trends, and loss patterns, and though you might not be able to control the market, you can take meaningful steps that help you stay the course on the path toward risk resilience.
Working in partnership with The Baldwin Group’s experts, you can receive guidance and insights so that you make informed decisions regarding your insurance program design, enabling you to respond to changes in the market, stay ahead of risk, and protect your lifestyle.
In the complete market update, we cover how the private P&C space continues to evolve in its search for equilibrium, and how you can respond.
For more information
We’re ready to help when you are. Get in touch and one of our experienced Baldwin advisors will reach out to have a conversation about your business or individual needs and goals, then make a plan to map your path to the possible.
This document is intended for general information purposes only and should not be construed as advice or opinions on any specific facts or circumstances. The content of this document is made available on an “as is” basis, without warranty of any kind. The Baldwin Insurance Group Holdings, LLC (“The Baldwin Group”), its affiliates, and subsidiaries do not guarantee that this information is, or can be relied on for, compliance with any law or regulation, assurance against preventable losses, or freedom from legal liability. This publication is not intended to be legal, underwriting, or any other type of professional advice. The Baldwin Group does not guarantee any particular outcome and makes no commitment to update any information herein or remove any items that are no longer accurate or complete. Furthermore, The Baldwin Group does not assume any liability to any person or organization for loss or damage caused by or resulting from any reliance placed on that content. Persons requiring advice should always consult an independent adviser.
