The year 2024 marks an important moment for businesses and their insurance programs. After seven years of fluctuating insurance rates, markets are experiencing signs of sta-bilization. The second quarter of this year showed steady rates—an occurrence not seen in the past seven years, according to the Marsh Global Market Index. While this indicates that some lines of coverage are finding balance, other markets remain under pressure. These include the property insurance market, the auto market, and the medical professional lia-bility market.
In this environment, it’s advisable for organizations to reassess their risk management strategies to determine that carrier partnerships, limits, retentions, and premiums are aligned with your business objectives. Below, we explore several factors to consider as you prepare to manage your insurance program in 2024.
PROPERTY INSURANCE
For the first time in seven years, the prop-erty insurance market is showing signs of stability. After several years of rate increases, 2024 is seeing an average rate increase of 11%. This is below what has been seen in the past seven years. However, properties with high exposure and substantial loss histories may still experience increases of 50 to 100%. This gen-eral drop in rates can present an opportunity for businesses to assess their risk profiles and focus on key coverage areas such as business interruption values, which must be calculated accurately for optimal protection.
The renewed stability in the property market does not come without challenges. Severe weather risks continue to be a major concern, particularly in regions like Southern California, which recently faced devastating wildfires. These natural disasters highlight the importance for organizations to evaluate their catastrophe risk assessments and adjust their insurance programs accordingly.
To mitigate the potential impacts of property market instability, the following includes examples of areas for businesses to assess:
• Risk Profile: Understand your organization’s specific risk factors and exposures.
• Renewal Cycle: Allow adequate time for the renewal process, considering potential risk factors.
• Catastrophe Risk Assessments: Use precise and updated assessments to inform decision-making and help guide your insurance purchasing process.
• Data-Driven Decisions: Utilize data to support making well-informed choices when purchasing or renewing property coverage.
As 2024 progresses, businesses in areas prone to natural disasters, particularly wildfires, must remain vigilant. Wildfire risks and other climate-related exposures continue to be a sig-nificant driver of rate increases. However, the stabilization of the market is a positive indicator for companies looking to balance their risk man-agement and insurance purchasing decisions.
CYBER LIABILITY
Marsh McLennan Agency’s 2024 Com-mercial Property Insurance Trends Report compiled by MMA and their specialists found that the cyber liability market is a bright spot in 2024, with improvements in premium costs, retention options, and overall market capacity. Businesses renewing their cyber liability policies are experiencing lower premiums and enhanced coverage offerings that were previ-ously unavailable.
However, with good news comes a word of caution: cyber risks are constantly evolv-ing, and the rise in ransomware and social engineering claims is putting pressure on the market. One growing concern is Business Email Compromise (BEC), a form of social engineering that has emerged as a major threat. Two significant cyber events have underscored the seriousness of this risk: the Change Health-care cyberattack and the CrowdStrike software update incident. Both have caused market uncertainty and raised concerns that the influx of claims could push the cyber liability market back into a hard market.
To manage these risks, the following proactive steps are recommended for organizations to consider:
• Partner with an Experienced Broker: Collaborate with a broker that has understands the cyber liability market. Marsh McLennan Agency’s experience can help you navigate the rapidly changing cyber landscape.
• Implement Strong Cyber Controls: Cybersecurity measures, such as the top 12 controls, are essential to protecting your organization from emerging threats.
• Broadly Market at Renewal: At renewal, it’s advisable to market your cyber policy to ensure that you secure effective terms and pricing. In some cases, the savings achieved through lower premiums may allow you to increase coverage limits for added protection.
While the cyber market is currently soft, it’s important to remain vigilant. The contin-ued rise in ransomware and social engineering claims could reverse the positive trends we’re seeing, making it important for businesses to stay ahead of potential threats.
MEDICAL PROFESSIONAL LIABILITY
The medical professional liability (MPL) as they have the potential to impact claims and coverage options.
Several key factors are driving the MPL market’s instability:
• Shock Verdicts: The prevalence of shock verdicts continues to impact the market, leading to higher claims costs and increased rates for policyholders (Guy Carpenter Health- care, Q1, 2024 and Data collected across several industries including education, youth organizations, social service agencies, health- care, religious organizations and government agencies, 2023)
• Tort Reform: A lack of tort reform in certain states, combined with the erosion of existing reforms, has contributed to growing claim severity trends. This trend has resulted in high-profile verdicts that are driving carriers to adjust their pricing and coverage options.
• Sexual Abuse and Molestation Claims: Large verdicts related to sexual abuse and molestation cases have prompted a strong response from MPL carriers. Some have intro- duced absolute exclusions for these claims, while others are implementing retroactive inception dates or sub-limited coverage. In extreme cases, certain carriers have exited the market altogether (Praesidium Report Data collected across several industries including education, youth organizations, social service agencies, healthcare, religious organizations and government agencies, 2023).
Adding to the complexity are recent legis-lative changes, which have increased scrutiny on providers of reproductive health services. These changes have introduced additional considerations when managing MPL policies, as they have the potential to impact claims and coverage options.
To navigate these challenges, consider the following:Â
• Develop Renewal Strategies: Work with your broker to assess your renewal strategy accounts against the risks and exposures in the MPL market.
• Develop Resilient Policies and Procedures: Implement internal policies to address potential exposure to high-severity claims.
• Engage Experienced Partners: Choose a broker with experience in the healthcare industry. Marsh McLennan Agency can help you navigate the complexities of MPL insurance.
As 2024 unfolds, businesses have an oppor-tunity to reassess their insurance programs in light of the stabilizing market. With property, cyber, and medical professional liability cov-erage presenting both challenges and opportu-nities, now is a good time to review your risk management strategies, ensure appropriate coverage, and explore ways to optimize costs.
By working with a knowledgeable broker like Marsh McLennan Agency, you can navigate these complexities with confidence. Whether you need assistance managing proper-ty risks, addressing cyber threats, or navigating the turbulent medical professional liability market, Marsh McLennan Agency’s experience can help support your organization’s insurance program in 2024 and beyond.
If you have questions about your insurance renewals or how Marsh McLennan Agency can assist your business, don’t hesitate to reach out. Together, we can help you make informed deci-sions that can protect your organization and keep it moving forward toward a future with limitless possibilities.
Renee Hellman is principal, business insurance, with Marsh McLennan Agency. Learn more at marshmma.com.
