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PIA Survey: Northeast Property Rates Up; Underwriting Changes Significant

Posted on 22 May 13 by Annie George

A survey from an independent agent’s association representing four states in the Northeast says the combination of escalating rates and stricter underwriting forced 93 percent of producers to increase their remarketing efforts over last year.

James E. Pittz, business issues director for Professional Insurance Agents (PIA) tells PC360 that of the 93 percent who increased their remarketing efforts, 15 percent say they had to remarket as much as a quarter of their book of business.

The survey of more than 400 members of the Professional Insurance Agents of Connecticut, New Hampshire, New Jersey and New York examined market trends in four market lines: Homeowners, Personal Auto, Commercial Property and Commercial Liability.

The largest shift came in Homeowners. Ninety-five percent of agents in the four states say new business rates increased, and 46 percent say the increases ranged from 6 percent to 10 percent. More than 45 percent say there is significant or extreme change in underwriting.

Turning to the Commercial Property market, the survey finds 96 percent say prices are up on new business and 97 percent say prices increased on renewals in the range of 6 percent to 10 percent. Thirty percent characterize changes in underwriting as “significant” or “extreme.”

"The fact that prices are shifting, combined with the changes in underwriting, signified that the market is moving toward a hard market," says PIANH President Scott Johnson, in a statement.

Pittz suggests that for both Homeowners and Commercial Property insurers are responding to losses from Superstorm Sandy, which struck the Northeast on Oct. 29, 2012.

For the Commercial Liability market, agents say rate increases are within the same range of increase as Homeowners and Commercial Property, but only 22 percent viewed underwriting changes as significant or extreme.

The Personal Auto market saw the least amount of change with increases ranging from 0-5 percent. Underwriting guidelines remained the same or saw minor changes.

The survey also found that:

• 37 percent of agents say that less than 5 percent of their business is going through wholesalers.
• 35 percent saw the same or no change in nonrenewals or cancellations for personal auto.

Pittz says that this survey is a benchmark for future market-trend surveys. Plans call for the next survey to be launched at the end of the year, he says.

The survey does not define what agents view as significant or extreme underwriting changes, but only sought to measure their impression of the market.