Overall, the rate of decline for commercial lines renewal pricing on average was 2.9 percent in the first quarter, compared with 5.4 percent in the fourth quarter of 2010.
“It’s too early to tell if the leveling off and modest price increases were a result of the fallout from the recent Japan disaster and other catastrophes earlier in the year, or if the market is reacting to broader market conditions,” said Ken A. Crerar, president of The Council.
The Council has been tracking commercial property/casualty rates since 1999. The survey represents a cross-section of commercial insurance brokers across the country.
The rate of decline for commercial renewal pricing for small and medium and large accounts slowed and flattened somewhat compared to the previous quarter.
Insurers are showing concern about future catastrophes. One broker noted, “Carriers seem concerned about the future CAT season. We’re only three months into the year and we’ve had a very active year already. There are still nine months of flood, tornado and hurricane seasons and this could certainly impact the marketplace.”
A broker from the Southern east coast reported that “January-February showed reductions in almost every account with improved terms and conditions. Following the New Zealand and Japan Earthquakes, the [Japan] tsunami, and the release of RMS 11, the CAT property underwriters started to show more discipline and have pushed for increases. Thus far, we have maintained flat pricing for the most part.”
Brokers across the country are seeing some subtle changes in workers’ compensation pricing and underwriting. A broker from the Southeast said workers’ comp markets are less likely to offer rock-bottom pricing. “They are pricing accounts based on loss activity and offering a fair price not just a 45 schedule credit to get the account.”
Another in the Midwest said, “Workers’ compensation is hardening in certain states/classes.”
Reflecting a slowly improving economic environment, demand for commercial products continues to pick up. Fifty-seven percent of the brokers responding to the survey said they saw an increase in demand, compared with forty-seven percent last quarter.
Competition with other brokers leads the major business headaches for brokers. They continue to worry about the economy and the budget deficit, but unease over health care reform has dropped to third place, but is nonetheless still significant.