Rate Hikes Drive P&C Growth

Personal lines P&C insurance premiums grew significantly, driven primarily by rate increases rather than expansion into new risks.

Themes

Navigating Global Uncertainty

Timeframe

near-term

Subcategories

Corporate Strategy Economic Policy Finance & Regulation Risk Management

Impact areas

Developed Markets Emerging Markets Personal Lines P&C Insurance

Detailed Analysis

The personal lines P&C insurance market experienced substantial premium growth, with a 9.5% increase in 2022-23, reaching $1.1 trillion. However, this growth was largely fueled by rate hikes implemented by carriers to restore premium adequacy after a period of high inflation and increased claims costs. This suggests a contraction in covered exposures rather than genuine market expansion. The report highlights that "Industry growth in developed markets was largely driven by rate increases, indicating limited expansion into new risks."

Context Signals

Global personal lines P&C premiums reached $1.1 trillion in 2023. Rate increases in the US auto market were 16%, exceeding premium growth of 11%. Widening coverage gap between mature and emerging economies.

Edge

As rates stabilize, insurers will need to find new growth drivers beyond pricing. Focus may shift towards innovation and expansion into underserved markets and risk segments. Potential for increased competition as new players enter the market attracted by previous premium growth.

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TRENDS

Keywords

consumer behavior economic factors insurance industry

Industry growth in developed markets was largely driven by rate increases, indicating limited expansion into new risks, while insurance affordability emerged as a significant topic in some markets including the United States because of rising underlying asset prices, the cost of repairs and frequency of damage (especially in areas exposed to physical risk), and rising reinsurance costs.

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