Connecticut commercial property owners are grappling with some of the highest insurance premium increases in the nation, according to a recent study by property analysis firm Trepp. The increases are attributed to rising repair costs driven by inflation and underwriters’ concerns about catastrophic losses along the East Coast, particularly in New England.
Trepp’s analysis revealed an average increase of 23 percent in commercial property and casualty insurance premiums last year for the Bridgeport-Stamford corridor, calculated on a cost-per-square-foot basis. This surge places Connecticut among the top regions for insurance hikes, with New Orleans experiencing the largest increase nationally at 37 percent, followed by Louisville, Kentucky, and Miami.
The firm analyzed line-item insurance premium costs reported by commercial property owners to derive aggregate estimates for different markets. Insurers across both commercial and personal property lines have been raising rates, a trend echoed in the health insurance sector as well.
According to Trepp, multiple factors are driving these cost increases. These include the rising frequency of natural disasters, adjustments in underwriting guidelines influenced by cybersecurity considerations, and diminished investment returns on insurance company assets.
Recent flooding in August, which severely impacted areas like Oxford and Southbury in the Housatonic River valley, served as a stark reminder of the need for sufficient property insurance coverage in Connecticut. This incident marked the state’s second federal disaster declaration this year, following earlier storm damage in January, with standard insurance policies typically excluding flood coverage.
“Factors such as increasing construction and labor costs, inflation, and elevated property values have contributed to higher repair and rebuilding costs,” said Trepp spokesperson Jennifer Spillane in an email to CT Insider. “The heightened risk from natural disasters, particularly storms and flooding, along with shifts in property usage due to hybrid work trends, have compelled insurers to reassess premiums. Additionally, rising reinsurance costs and increased claims activity in the region have also played a role.”
The Connecticut Insurance Department estimates that the shoreline properties in the state are valued at approximately $675 billion.
In a separate study by Marsh & McLennan, cybersecurity and data privacy emerged as the top risk for many businesses surveyed, though half of the participants expressed ongoing concerns regarding natural disasters and their impact on insurance costs.
The property and casualty insurance market in Connecticut remains highly competitive, with 825 underwriters providing coverage options under the oversight of the Connecticut Insurance Department.
Travelers, the second-largest commercial carrier in the U.S. after Chubb, is preparing for increased payouts in the Northeast and Mid-Atlantic regions. The company added an additional $150 million in coverage to its reinsurance contract this summer, raising its total coverage to $1 billion, reflecting a 17 percent increase. This contract addresses single incidents of hurricanes and other disasters from Virginia to Maine, regions that suffered substantial damage from successive storms last winter.
Some commercial property owners have called for more reasonable pricing, particularly national accounts, as reported by Travelers executives in July. Travelers indicated a willingness to forgo certain business opportunities rather than accept unfavorable terms, according to Greg Toczydlowski, president of business insurance lines for the company. “We’re reviewing our business portfolio to ensure a better risk-return profile,” Toczydlowski stated in a July conference call with analysts.
Similarly, The Hartford, which ranks eighth for commercial insurance premiums, reported double-digit growth in property insurance pricing in its second-quarter results. CEO Christopher Swift noted, “While commercial property pricing is beginning to moderate, it remains strong. We expect to maintain our disciplined approach to risk selection and pricing.”
