Commercial lines premium growth expected to continue: Swiss Re

Swiss Re Ltd. said Friday it has raised its premium growth estimate for commercial lines to 9.0% from 7.5% in 2023 and still expects 5.5% growth in 2024.

“Overall, we expect rate increases through 2023 as inflation and catastrophes put upward pressure on claims and operating costs,” the reinsurer said in a report.

Average rates for commercial lines increased by 8.9% year-on-year in second–quarter 2023, up slightly from 8.3% in 2023, according to the latest figures from CIAB survey reports, Swiss Re said. Property rate increases decelerated slightly to 20% after a 21% increase in first-quarter 2023.

The report also said the forecast combined ratio for the property casualty sector will decline in 2024 to 98.5% from a forecast 102% in 2023 as declining inflation exerts less pressure on loss severity and profitability.

The annual combined ratio for 2022 was 102.7%, but the figure surged to 107.3% in second-quarter 2023.

“We expect loss severities to ease as average US headline CPI inflation decelerates to our forecast 4.0% in 2023 and 2.5% in 2024, setting the stage for improved underwriting results as rate gains eventually outpace claims costs,” the report said.