Woodruff Sawyer & Co. on Tuesday forecast commercial real estate prices could rise 30% or more for the most challenged exposures, but the most favorable risks could see flat renewals in 2023.
Movements in the casualty market are expected to be less severe, although surplus markets may be challenging as late-year losses from Hurricane Ian dashed any hopes of relief in property markets.
Accounts with heavy catastrophe exposure that have shown little risk improvement and an unfavorable loss history could see the biggest real estate gains — 30% or more, The San Francisco-based brokerage said.
Those without catastrophe exposure but still showing little risk improvement and unfavorable loss history could see increases of 15% or more.
Catastrophe exposed risks that have shown improvement and a favorable loss history are expected to see increases of 5% to 10%.
Those accounts with a favorable loss history with risk enhancement and no catastrophe exposure could see a 0% to 5% increase in 2023, Woodruff Sawyer said.
In casualty markets, commercial general liability is expected to increase by 2% to 7%, while commercial auto markets are expected to see increases of 5% to 8%.
Umbrella and excess liability coverage was described as a “difficult environment.” Large companies with sales of $1 billion or more could see rate increases of 6% to 15%, while middle-market and small businesses are expected to see rate increases of 4% to 10%.
The broker added that losses linked to Hurricane Ian have changed previous market forecasts.
“Prior to Hurricane Ian, there was some hope that commercial real estate prices would stabilize, and in some cases insureds would receive price reductions. Post-Ian, that hope has all but disappeared,” it said.