NU Online News Service, Jan. 25, 10:34 a.m. EST
Workers’ compensation led the way for fourth-quarter rate increases at 7.5 percent—contributing to an overall industry average rise of 2.8 percent for the time period, according to The Council of Insurance Agents & Brokers.
The Council released its 4th quarter survey results of member insurance brokers yesterday, saying prices have rebounded from negative-5.4 percent for the same period last year.
“It’s clear from the data that the market continued its upward momentum in the fourth quarter,” says Ken A. Crerar, president and chief executive officer of The Council. “Capacity was still strong, but prices rose in the face of declining underwriting profitability, dwindling reserves and huge [catastrophe] losses.”
Average rates, on a quarter-to-quarter basis, stood at 0.9 percent for the third quarter of 2011 rising to 2.8 percent in the fourth quarter.
All three account sizes displayed increases in the fourth quarter, compared to the previous quarter where only small and medium size accounts increased.
Small accounts rose 3.1 percent in the fourth quarter compared to 2.1 percent for the third quarter. In the 2010 fourth quarter, rates for small accounts stood at negative-3.8 percent.
For medium-sized account, rates increased 3.5 percent after coming in at 1.1 percent for the third quarter. Fourth quarter 2010 rates stood at negative-5.6 percent.
Large accounts were up 1.8 percent. In the third quarter, rates stood at negative-0.6 percent while for the fourth quarter of 2010 rates were negative-6.7 percent.
Workers’ comp has been on a steady rise during all of 2011, starting off last year at negative-1.6 percent and moving into positive territory in the second quarter at 2.6 percent. By the third-quarter survey, rates rose 4.1 percent before finishing the year at 7.5 percent.
Rate increases on commercial-property accounts were not far behind, coming in at 5.7 percent. They too showed steady increases during the year, at 3 percent for the third quarter and 2.2 percent in the second quarter. Rates started out 2011 at negative-2 percent.
Other lines of business that ventured into positive territory include commercial auto, general liability, umbrella, business interruption, construction, directors and officers liability, employment practices and surety bonds.
Surety bonds displayed the lowest increase for the fourth quarter coming in at 0.8 percent.
In anecdotal comments released by The Council, brokers said carriers have become tougher on underwriting and that they are paying close attention to loss experience.
Brokers said that in some lines, carriers were willing to walk-away from business if they did not get the desired rate.
The demand for insurance appeared to pick-up, according to the survey results, but The Council says the economy and competition were still a concern for brokers nationally.