Posted on 06 Jun 2012 by Neilson
In May 2012, the composite rate for commercial insurance placed in the United States was up 4 percent as compared to pricing in May 2011.
Richard Kerr, CEO of MarketScout outlined the latest rate increases by noting, "Workers’ compensation and property rates continue to lead rate increases across the United States at increases of 5 percent. BOP policies had the next greatest rate increase at plus 4 percent."
Small and medium account rates were up 4 percent. Large accounts were up 3 percent and jumbo account pricing increased only 1 percent. Kerr noted,
"It’s not unusual for underwriters to aggressively price jumbo accounts because of the cache they bring. Fortune 100 Show Pony accounts bring bragging rights but sometimes the rates do not justify the exposure. It is difficult to compare rates with smaller accounts because jumbo accounts frequently implement high retentions, captive involvement and heavy reinsurance."
Mr. Kerr added, "Some major insurers value Fortune 100 accounts more than they would a spread of 100 accounts at the same premium with significantly lower loss ratios. Economically, it doesn’t make sense but a few major commercial insurers are extremely aggressive when pricing jumbo accounts. Those insurers are suffering from the Show Pony Syndrome as inadequate pricing on prior years is coming home to roost. Soon, we expect jumbo accounts pricing to increase."
By industry class, manufacturing, contracting, habitational and transportation accounts all measured rates up 4 percent. Service, public entity and energy account pricing was up 3 percent.