Commercial rates fell in December 2014 -- sending out warningsigns for the return of a soft market -- while personal ratesmoderated during the same period, according to a recent report fromMarketScout.
|"We are on a cusp of a soft market," says Richard Kerr, CEO ofMarketScout. "Throughout 2014, the composite P&C rate slowlydrifted towards renewing as expiring, and in December we finallyhit that mark."
|By coverage classification, rates for all commercial coverageswere down 1% in December with the exception of employment practicesliability insurance (EPLI), which remained at +2%, and commercialproperty and auto, which were down 2%.
(See chart on the right for December 2014 commercial rates bycoverage.)
|According to Kerr, the insurance industry entered a hard marketin November 2011 and, after 37 months, "the rate increases appearto be over." Kerr expects the next soft market cycle to begin earlythis year.
|"It's coming -- and soon," says Kerr. "We don't expect theaggressive pricing that occured in the last soft market cycle;however, smart companies will be prepared for a changing rateenvironment."
|Meanwhile, premiums for homeowners and auto policies moderatedin December 2014.
|Homeowners and auto policies were 1% less expensive in Decemberthan in November. Homes valued up to $1,000,000 were up 3%, whilethose over $1,000,001 were up 2%.
|Auto insurance rates were up 2% and personal articles rates wereup 1%.
|"The personal insurance market has been relatively stable in2014 with rate increases ranging from 2% to 4%," says Kerr. "Weexpect continued pricing stability in 2015 absent cataclysmicevents."
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