Another Quarter, Another Hike in Commercial Property Insurance Rates

Commercial property owners can’t help but want to cover their eyes when checking on insurance premiums.

Steady, longstanding spikes have become more than just “little things that add up” regarding overall operating expenses.

Now comes data from Ivans Index for Q2 2023 that reports the average premium renewal rate change for commercial property increased quarter over quarter at 9.77% versus 8.89% in Q1 2023.

This follows the Q1 report from The Council of Insurance Agents & Brokers, which showed that the average increase in commercial property premiums spiked to 20.4%, which is the first time since 2001 that this line recorded an increase higher than 20%.

Ivans said that the premium renewal rate change in Q2 2023 reached its low of 9.34% in June and experienced its high in April at 10.09%.

The average premium renewal rate change for commercial property was significantly higher in Q2 2023 than in Q2 2022, which averaged 6.40%, with the most significant change in April 2023 at 10.09% compared to 6.05% in April 2022.

Premiums have been rising by double digits in many markets. Some policy renewals offered half the coverage for that same price. The lack of affordable options is putting needed levels of coverage out​ of owners’ reach.

This is laid over a Moody’s Investor Service report, showing overall expenses for CRE properties are up by more than a third between 2017 and 2022.

Insurance is up 73% over the last five years, utilities are 40% more expensive, and property taxes and other operating expenses rose 27% and 29% respectively.