Filed Under:Markets, Commercial Lines

Commercial insurance rates are dropping; here's why

If you're a commercial insurance buyer, next year might be good news for your budget.
If you're a commercial insurance buyer, next year might be good news for your budget.

Commercial insurance rates are dropping dramatically and will continue to do so in 2015, according to a macro insurance report released this week by Willis Group Holdings.

Across the board, rates will drop due to a softening market where insurance groups can now compete with each other based purely on price, read the report.  

“For insurance buyers and risk professionals, now is the time to think about the strategic possibilities as renewals approach,” said Chief Placement Officer of Willis North America, Matt Keeping, in a press release.

Commercial casualty lines are expected to range between -10% and 10% for 2015, and commercial property rates, which have fallen for several quarters, in 2015 are expected to reduce by 10% to 15% for both catastrophe and non-catastrophe-exposed risks, according to the report.

“A mega disaster with insured losses of $50 billion, or even more, might not turn the market, with eager capacity flooding in to take advantage of what would normally be a rate hike following such a loss,” said Keeping. “Absent such an event, we can easily imagine scenarios where rate softening accelerates and rates go over a cliff – or at least approach the edge.”

Workers’ compensation across the nation has seen historic lows despite issues in New York, California, Pennsylvania and Massachusetts, where increases of up to 8% are expected in the next year. However, states across the nation are starting to apply for lower rates in 2015, according to the report.

There are some increasing rates, especially for those within aviation and cyber insurance. Those two markets are looking at dramatic increases next year, up by 20% at minimum, according to Willis Group.

But insurance buyers should generally be at ease with rates next year, according to Keeping, who said that the market is overall softening, making it better for consumers.

“With opportunistic capital continuing to show interest in the insurance sector, we wonder if the traditional cycles of hard and soft market might be changing,” he said.

Here are the key predictions from Willis for 2015:


Non-CAT Risks:

-10% to -15%

CAT-Exposed Risks:   

-10% to -15%


General Liability:

-10 to +10%


-10% to +5%       

Workers’ Comp:

-5% to +5%; up to +8% in CA


-10% to +10%


Directors & Officers:

-5% to +5%

Errors & Omissions:

Flat to -5% or more for programs with good loss experience; +5   to +20% for programs with poor loss experience

Employment Practices Liability:

Flat to +5%


Flat to +5%


-2% to +5%; Flat to 20% for POS retailers; more competitive for first-time buyers



+20% to +30% 


Flat to +10%


Self-Insured plans:  

+5%   to +6%

Insured plans:            

+9.5% to +10.5%

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