In the past year and a half, there has been a turnaround inpricing for high-valued homeowners risks, as insurers readjustafter several years of strong competition in this line,MarketScout CEO Richard Kerr says.

Kerr, in a statement accompanying the latest MarketScoutMarket Barometer covering the month of December, notes thatover the last four years, competition from newer high-net-worthinsurers pressured rates. But more recently, insurers have beenraising rates “to more appropriately price for the broader coverageprovided,” Kerr says.

Insureds have been willing to pay for the increases thus far, hepoints out. In December, this translated to a 5% increase in ratesfor homes valued over $1 million—the largest increase for any line.Rates for homes valued under $1 million and personal articlesincreased by 3%, while auto was up by 2%.

Overall, Personal-lines rates were up by 3% in December comparedto a year ago, unchanged from November's year-over-yearincrease.

Commercial lines

The New Year might not be welcoming for insurers hoping to seesignificant rate increases, as alternative capital will most likelycontinue to pressure pricing, according to Kerr.

He says, “If you are in favor of significant rate increases in2014, you may be disappointed sans a catastrophic event or somesort of new tort-liability issue.”

Kerr notes that investors are “clamoring for decent returns ininstruments not directly connected to the stock market,” and adds,“Insurance-linked securities and new-age reinsurance structureshave opened the insurance market to many new investors, and, as aresult, additional capacity. This added capacity may well putadditional pressure on rates in 2014.”

As for December's Market Barometer, MarketScout says ratesincreased by 3% compared to the same month in 2012, moderating abit from November's 4% year-over-year increase.

In December, as in November, commercial-auto rates increased themost out of any line, but while rates were up by 5% in November forthis line, in December rates rose by 4%.

Crime, surety and fiduciary rates increased the least inDecember—up by 1%.

By account size, rates for small (up to $25,000 in premium)accounts increased the most—up by 5%. Medium ($25,001 to $250,000)and large ($250,001 to $1 million) accounts were up by 3% and jumboaccounts (over $1 million) were up by 1%.

By industry class, rates for contracting and transportationrisks increased the most in December at 5%, while public-entityrisks increased the least at 2%.