Insurance brokers across the country reported price increases in the commercial lines market in the 4th quarter of 2012, according to The Council of Insurance Agents & Brokers' quarterly Commercial P/C Market Index Survey. Pricing rose on average at a rate of 5.0 percent, compared with 3.9 percent in the 3rd quarter of 2012, across small, medium and large accounts.
"I think you can characterize the fourth quarter as more of the same," said The Council's President/CEO, Ken A. Crerar. "Carriers were still cautious about the risks they were putting on their books and pushed for price increases where they could get them."
The workers' compensation market clearly was in distress last quarter. In one Northeast broker's words, workers' compensation was "crashing." The broker said prices escalated 30 percent to 50 percent, mostly on large accounts. In the Midwest, a broker said some carriers weren't particularly interested in writing workers' compensation accounts. Others said monoline coverage was harder to find.
Property prone to catastrophes was also tough to write, according to survey results. A Southeast broker stated, "Sandy brought flood back under the microscope and carriers scrutinized coverage harder and cut flood limits."
In the Northeast where Sandy hit hardest, carriers decreased CAT limits such as flood and wind, while increasing deductibles in both areas. Brokers reported similar stories for vulnerable property across the country. Many carriers asked for percentage wind/hail deductibles and some cut back on property exposures altogether. "Carriers didn't want an "account that was running a high loss ratio," a Southwest broker commented.
The general feeling of the market last quarter can be summed up this way: underwriters looked carefully at their potential loss exposures and in some cases were willing to walk away rather than get caught short.