Commercial pricing took another leap in the second quarter of the year, according to The Council of Insurance Agents & Brokers’ quarterly Commercial P/C Market Index Survey. Across small, medium and large accounts prices rose on average by 4.3 percent – the fourth quarter in a row to see price increases. Small and medium accounts saw the largest increase at 4.3 percent and 4.9 percent, respectively.
“There’s no doubt it was a tougher market for buyers the last three months than the quarter before,” said Ken A. Crerar, president/CEO of The Council. “Rates continued to climb as insurers tightened reins on underwriting. More business was being pushed into the surplus lines market as carriers pulled back on capacity, particularly for catastrophe exposures.
Catastrophe losses for the first half of the year were $9.3 billion, down from the $24.4 billion last year. Even so, carriers raised rates and deductibles and reduced capacity on property with exposures.
“Property premiums increased due to claims and CAT exposures,” said a broker in the Southeast. “[The] area has been hit hard in the past 12 months.”
In the Northeast, “Property CAT rates experienced the greatest rate increases,” said one broker. Meanwhile, according to a respondent in the Midwest,
“Earthquake capacity reduced, deductibles changed some on earthquake and wind/hall deductibles were being added.” A southwestern broker found it “more difficult to find carriers for the tough exposures.”
Workers’ compensation continued to be a tough market across the country and in some cases carriers did not renew accounts. “Workers’ compensation is just a difficult line to get placed if any kind of loss history exists for smaller workers’ compensation premium policies,” a Midwestern broker commented. In the Southeast, “Workers’ compensation accounts with difficult classes and/or loss experience were seeing much larger increases or non-renewals.” And in the Northeast, “Workers’ compensation continued to cause issues for clients with placements from voluntary markets to residual markets.” Accounts with losses and any construction saw higher rate increases than other accounts in the Northwest, a broker reported.
On another note, 60 percent of the brokers responding said demand for insurance did not improve during the second quarter. This compares to the nearly 60 percent who said demand did improve in the first quarter. While difficult to assess, demand may have stayed flat due to the sluggish economy and/or the increase in pricing.
The economy and the federal deficit continued to be the top political issue. As for what keeps brokers awake at night, 58 percent said finding and training new talent was a top priority.
The Council’s survey is the oldest, most authoritative source of existing market conditions, pricing practices and trends, dating back to 1999.