The Council: Commercial P&C Market 'Has Made a Hard Turn'

NU Online News Service, May 8, 11:07 a.m. EDT

A recent survey leads The Council of Insurance Agents & Brokers to declare that the commercial property and casualty market has hardened.

“We've been cautious up to now about declaring a market turn, but I think it's reasonable to say that the market has made a hard turn after two quarters of price increases and tighter underwriting,” says Ken A. Crerar, president and chief executive officer of The Council, in a statement. “It's difficult to predict length and severity, but the market has turned.”

Pricing for small, medium and large commercial accounts was up an average of 4.4 percent during the first quarter, according The Council's quarterly market survey.

The increase continues a trend. Pricing was up an average of 2.7 percent on all accounts during 2011's fourth quarter after beginning to edge up nearly 1 percent in the third quarter last year.

Going back a year, pricing was down 2.9 percent on small, medium and large accounts during the first quarter in 2011.

Brokers who responded to the survey say losses from catastrophes drove rate increases. Hard-to-find coverage such as earthquake and flood increased 25 percent, says another broker. A new version of a hurricane model from Risk Management Solutions also drove up rates, especially on the coast.

The greatest increase from the fourth quarter last year to the first quarter this year was seen in large accounts. Rates here were up an average of 4.1 percent this quarter compared to up 1.6 percent during 2011's fourth quarter.

By line, workers' compensation and commercial property appear to be leading the rate-hardening charge. Workers' compensation prices were up 7.4 percent in the 2012 first quarter after going up 7.5 percent during the 2011 fourth quarter.

Commercial property was up 6.5 percent for the first quarter. Pricing in the line was up 5.7 percent the last quarter of 2011.