Commercial-insurance rates climbed by 5 percent in December 2012 compared to December 2011, according to MarketScout’s latest figures, capping off a year marked by slow and steady rate increases, rather than the dramatic spike seen in the hard market of 2001-2005.
But while 2012 didn’t see increases typically associated with a hard market, it was the first year of consistent rate increases after over seven years of soft-market pricing.
“Beginning January 2012, the composite rate was up 1 percent but steadily increased over the course of the year,” Dallas-based MarketScout says. “By year end, the average rate increase on property and casualty business in the U.S. was up 5 percent.”
Richard Kerr, CEO MarketScout CEO says in a statement, “This market turn is not like the last hard market of 2001 to 2005, when rates spiked up as much as 30 percent in the early stages. For the 2012 market turn, rates have adjusted slowly and steadily without any dramatic spikes. This slow and steady pace could foretell rate increases at a more sensible pace and for a longer period of time.”
Small accounts, with premium up to $25,000, led the way for December rate increases, rising by 6 percent compared to December 2011. Medium accounts, with premium from $25,001 to $250,000, were up by 5 percent. Large accounts ($250,000 to $1 million) were up by 4 percent and jumbo accounts were up by 3 percent.
By coverage class, commercial auto was up the most in December, rising by 6 percent. Commercial property and general liability were up by 5 percent. Business interruption, BOP, umbrella/excess, workers’ comp, professional liability, and D&O were up by 4 percent. Inland marine and EPLI were up by 3 percent. Fiduciary and crime were both up by 2 percent, and surety was up by 1 percent.
By industry class, manufacturing, service and transportation were all up by 6 percent. Contracting and habitational rose by 5 percent, while public entity and energy rose by 4 percent.