Commercial Rates Continue Steady Climb in Q4, January; Workers' Comp Seen as 'Distressed'

Property and casualty commercial-lines rates climbed by 5 percent during 2012’s fourth quarter, according to a quarterly survey. Rates also rose by 5 percent for the month of January, MarketScout’s latest Barometer reveals.

Both reports lend more evidence to the idea that the commercial-lines segment is on a slow but steady upward trajectory.  

The latest survey from The Council of Insurance Agents & Brokers shows that the 5 percent 2012 fourth-quarter overall rate increase across all account sizes outpaces the increases seen in any other quarter during the year. Rates were up by 3.9 percent in 2012’s third quarter, up by 4.3 percent in the second quarter, and up by 4.4 percent in the first quarter.

But CIAB President and CEO Ken A. Crerar says in a statement that he does not see much of a difference between the latest survey results and the increases seen earlier in the year. “I think you can characterize the fourth quarter as more of the same,” Crerar says. “Carriers were still cautious about the risks they were putting on their books and pushed for price increases where they could get them.”

Rates for small accounts increased 5.5 percent in the fourth quarter, rates for medium accounts were up by 5.1 percent, and rates for large accounts climbed by 4.4 percent.

CIAB says the workers’-compensation market “clearly was in distress last quarter.” An analysis released with the survey results says, “In one Northeast broker’s words, workers’ compensation was ‘crashing.’ The broker said prices escalated 30 percent to 50 percent, mostly on large accounts.”

The analysis cites another broker in the Midwest stating that some carriers do not seem interested in writing workers’ comp.

Superstorm Sandy has also had an impact on the property market, brokers report. The CIAB analysis says a Southeast broker commented, “Sandy brought flood back under the microscope and carriers scrutinized coverage harder and cut flood limits.”  

CIAB further states that in the Northeast, carriers decreased limits for flood and wind while increasing deductibles.

“Brokers reported similar stories for vulnerable property across the country,” says CIAB. “Many carriers asked for percentage wind/hail deductibles and some cut back on property exposures altogether.”  

For January, Dallas-based MarketScout says rates for small accounts increased by 6 percent, while medium accounts were up by 5 percent and large accounts were up by 4 percent.

“The commercial market is continuing its slow but steady upward trajectory in rates and premiums,” says Richard Kerr, CEO of MarketScout, in a statement. “Couple this with slight increases in exposures and the overall premium written on an expiring account is frequently up 8 to 9 percent.”

By line, commercial property and general liability led the way for rate increases, with both coverage classes up by 6 percent. Business-owner policies and commercial auto were both up by 5 percent; workers’ comp, professional liability and directors and officers increased by 4 percent; inland marine, business interruption, umbrella/excess and EPLI climbed by 3 percent; and fiduciary and crime both rose by 2 percent. Surety showed the most modest increase at 1 percent.

The manufacturing and transportation industries saw the highest increases in the month, at 6 percent. Rates were up by 5 percent for the contracting, service and habitational industries, while the public entity and energy industries had rates climb by 4 percent.

About the Author
Phil Gusman, PropertyCasualty360.com

Phil Gusman, PropertyCasualty360.com

Phil Gusman is Managing Editor of PropertyCasualty360.com. Prior to joining National Underwriter in 2008, he was Editor of Insurance Advocate. Gusman has also served as Associate Editor of Crackdown!, an insurance fraud publication, and Assistant Editor of Empire State Report, which covers New York politics. He graduated in 2002 from Plattsburgh State University in New York. Gusman may be reached at pgusman@summitpronets.com. Follow him on Twitter: pgusman and PC360_Markets

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

PropertyCasualty360 Daily eNews

Get P&C insurance news to stay ahead of the competition in one concise format - FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.