While conditions in the commercial insurance market are still generally stable and predictable for buyers, a sense of fragility remains as insurers and business leaders closely watch natural catastrophes, escalating social inflation, and an unpredictable geopolitical environment, according to the latest edition of the Lockton Market Update.

The quarterly report from Lockton, the world's largest privately held independent insurance broker, provides timely and relevant market insights for commercial insurance buyers. The December Lockton Market Update highlights U.S. economic conditions affecting insurers, trends in transaction liability insurance, and key considerations for businesses under the new presidential administration. 

"2024 was another year of ups and downs and unexpected events, yet insurers' earnings resiliency is generally strong," said Lockton's Risk Practices Leader Mark Moitoso. "We witnessed significant weather volatility, continuing geopolitical tensions, and the election of a new U.S. president. In this dynamic environment, business leaders need strong, actionable market intel to make informed decisions."

While third-party liability remains a troubling outlier, ample capacity, greater competition, and strong reinsurance support are driving rates down for property, workers' compensation, directors and officers liability (D&O), and cyber insurance. 

The report also highlights how property market conditions are performing better than expected, despite accumulating losses from hurricanes and severe convective storms. However, results can vary significantly depending on individual buyers' circumstances.

Key highlights:  

• Insurers demonstrate strong earnings, but the commercial market remains fragile.  
• The property market remains competitive, despite losses from natural catastrophes. 
• Workers' compensation continues to be a bright spot for insurers.  
• Complex litigation threats and adverse reserve development remain significant concerns for liability insurers. 
• D&O pricing continues to fall, particularly for public companies.  
• Although cyber market conditions are currently favorable to buyers, there are signs of potential firming.  

"With a strong U.S. economy and a generally stable insurance market, fears of a recession or a return to a hard market have largely subsided," said Moitoso. "However, a major unexpected event could still disrupt market stability. The market is very focused on pricing, structure, and terms and conditions for third-party coverages. That is one of the most pressing narratives as we enter 2025." 

Explore the December 2024 Lockton Market Update for more insights and recommendations for insurance buyers.