Commercial-lines rates in the U.S. and abroad continued their recent trend of moderate increases last month, according to two recent analyses.

In its most recent Market Barometer, which measures U.S. commercial-lines rates, Dallas-based MarketScout says rates in September increased by 5 percent compared to the same month a year ago. Rates for small and medium-size accounts (defined as up to $250,000 in premium) were up 6 percent, while large accounts (between $250,000 and $1 million) were up by 4 percent. Rates for jumbo accounts (over $1 million in premium) were up by 3 percent.

By coverage class, Commercial Property was the only line to see a lower rate of increase compared to August's MarketScout report. In the current report, Commercial Property rates were up by 6 percent in September compared to September 2011; August 2012 saw rates in this line up 7 percent compared to August 2011.

Four lines of business showed rates increasing by one point in September compared to increases reported in August:

Business Owners' Policies, up 5 percent in August, climbed by 6 percent last month.
Umbrella and Excess rose 4 percent in September compared to 3 percent in August.
Commercial Auto rose 5 percent in September compared to 4 percent in August.
Fiduciary was up 2 percent in September compared to up 1 percent in August.

Meanwhile, insurance broker Marsh released its Global Insurance Market Quarterly Briefing, which found that global P&C insurance rates increased by a mere 0.9 percent for major lines during the third quarter of this year compared to a 1-percent increase in 2012's second quarter.

The report says that rates for renewals in the quarter increased by 1.4 percent.

Andrew Chester, CEO of Bowring Marsh, Marsh's specialist international-placement broker, says, “With capacity and appetite for well-managed risk still strong, insureds are still able to achieve favorable results on renewal in many lines of business.”

Among some of the report's highlights:

Financial and Professional insurance rates rose 1.9 percent in the third quarter, in contrast to almost flat renewals in Q2.
A benign natural-catastrophe season kept increases to an average of 1.2 percent on Property insurance renewals for the third quarter. Insureds with a clean history “were more likely to experience flat renewals,” according to Marsh.
Casualty insurance rates rose 1.2 percent on renewal for the period, higher than the 0.8-percent increase seen in the second quarter.

The report notes that “underwriters continue to show caution around particular risks,” such as Fracking and Cyber Liability.

U.S. companies, the report states, were more likely to experience rate increases than decreases in major lines of insurance for the second quarter in a row.

The report calls attention to capacity issues concerning the global-energy market; insurers are closely managing their exposures in that line of business after substantial losses over the past several years.

“Insurers are struggling to provide sufficient insurance capacity for the growing number of mega-energy projects—those with capital expenditure of more than $5 billion,” the report states.

Those clients are also willing to self-insure if they cannot find acceptable terms among insurers, Marsh notes. However, midsize energy projects, valued between $500 million and $5 billion, are enjoying the benefits of “fierce levels of competition among insurers.”

Rates for Directors & Officers coverage in the U.S. experienced increases as high as 10 percent, according to the report. While the number of securities lawsuits remains stable, increases in legal fees have put pressure on insurers.

“Much of this increase can be attributed to larger and more complex cases coupled with higher legal-billing rates,” the report says. “As a result, in the U.S. market, primary rates are trending upward.”

PERSONAL LINES

MarketScout also released a barometer for personal lines, which showed rates up by 3 percent in September compared to the same month a year ago.

MarketScout CEO Richard Kerr says, “High-net-worth Homeowners' rates were a bit more competitive in September, with a rate increase averaging 2 percent as compared to 3 percent the prior month.”

Rates for homeowners insured for under $1 million in value saw their rates up an average of 3 percent year-over-year, a figure unchanged from August.

Personal Articles rates were up by 3 percent, the same rate of increase seen in August.

Special Reports /

Commercial-Lines Rates Continue Their Slow, if Mostly Steady, Ascent

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