Rates for Business Owners Policies (BOP), Professional Liability, Directors and Officers (D&O), Employment Practices Liability Insurance (EPLI), Crime and Surety policies were flat. General Liability and Property rates were down 3 percent.
According to Richard Kerr, Chief Executive Officer of MarketScout, "It looks like workers’ compensation will be the coverage leading us out of the soft market. Rates for workers’ compensation are up 1 percent. Workers’ comp is the only coverage with an actual rate increase in June."
Workers' compensation rates vary by state and are impacted by local variables. One large insurer recently left the monoline workers' compensation market and another is not accepting new business in Colorado, Georgia, Oregon or Pennsylvania. These movements are impacting pricing in those states.
In an overview statement on the worker's compensation market Kerr commented, "There are many comp markets aggressively seeking business which fit into their online platforms. These platforms target accounts under $100,000 with less hazardous SIC [standard industrial classification] codes. With several new online entrants and the seven or eight markets that have been writing online for many years, online business is a price-driven, competitive segment of the market. Exacerbating the aggressive pricing nature of online comp are the SEMCI [single entry multiple carrier interface] quoting models deployed by some wholesalers and aggregators. These models enable intermediaries to easily spreadsheet five or six carriers to determine the cheapest price. This SEMCI model works well for agents and their customers on commodity business such as work comp and BOP. This segment of the comp market continues to be quite competitive, with rate reductions of 3 to 4 percent, as insurers fight for the lowest risk SIC codes related to smaller business."
Kerr also commented, "For comp accounts which do not fit the online models and require a regional underwriter's approval, prices are flat. For accounts which must be referred 'upstairs' prices are increasing more, up to 7 percent in some cases. There is a dearth of craftsmanship underwriting in the worker's compensation field and as a result, tough class codes and larger accounts have fewer markets interested in quoting. The result is simple. More buyers than sellers means a price increase which, in our estimation, will only grow larger over the coming months."
"The composite comp rate is up only 1 percent but that increase includes the impact of aggressive pricing of smaller, online placements which offsets price increases in the larger, more difficult accounts."
The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout's analysis of market conditions. These surveys help to further corroborate MarketScout's actual findings, mathematically driven by new and renewal placements across the United States.