Rates are rising, multiple studies agree—even global-property rates in non-catastrophe-exposed areas. But at least one firm, ALIRT Insurance Research, maintains the industry has not yet reached its "tipping point" for a hard-market turn.
In March, says Dallas-based online-insurance exchange MarketScout, commercial-insurance rates climbed by 3 percent, outpacing February's 2-percent increase.
MarketScout says Commercial Property and Workers' Compensation lines led the way with increases of 4 percent. Other lines of business were up 1-2 percent. Fiduciary and Crime were the exceptions, coming in flat.
"Our results continue to show a slow and steady path toward rate increases in all segments, be it by line of coverage, industry group or accounts size," says MarketScout CEO Richard Kerr.
By account size, small, medium and large accounts were up 3 percent while jumbo accounts (with more than $1 million in premium) were up 2 percent.
In another sign of price-shifting, an April 10 report by Marsh states that in Q1 2012, global-property insurance rates rose in both catastrophe- and non-catastrophe-exposed areas. Previously, reports had indicated that only catastrophe-exposed regions were seeing rate increases.
In the U.S., Marsh says non-catastrophe-exposed property risks climbed by up to 10 percent. Catastrophe-exposed risks, meanwhile, increased between 10 percent and 20 percent.
Around the globe, Marsh says it expects rates to continue rising moderately for both catastrophe- and non-catastrophe-exposed risks.
Marsh says the U.S. primary-casualty market "continued to show signs of stress in the quarter, and rates overall are expected to increase, although in a tight range—typically a flat-to- 5-percent increase at renewal—for all lines."
The Workers' Compensation market in the U.S. saw combined ratios at their highest levels in more than a decade in 2011, Marsh says, as claims frequency and severity continued to grow.
However, while property and casualty rates are undoubtedly on the upswing, ALIRT maintains that there is still no concrete evidence of a hard-market turn because financial indicators have not reached a tipping point.
The Windsor, Conn.-based firm, in its "Year End 2011 P&C Industry Review," says that in analyzing trends for the past 17 years for the leading 100 U.S. personal- and commercial-lines insurers, the financial stress insurers experienced last year is not close to past hard-market-turn experience.
"We will likely need to see composite scores needle further downward before enough financial 'pain' exists in the industry to push prices appreciably higher," ALIRT says.
Among some of the financial indicators that did not perform well in 2011 for the P&C insurance industry (according to ALIRT's analysis): Composite surplus fell 2.2 percent.
What is missing for a hard market turn, ALIRT argues, "is diminished capacity (both in terms of capital and willingness to compete), woefully deficient reserve positions, and poor earnings metrics."
The combined ratio for 2011 was 107.1, a 4.5 percentage point deterioration from the previous year primarily due to catastrophe losses—but helped by $5.5 billion of prior-year reserve releases.
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