July Commercial Rate Increases Moderate as Market Goes 'Quiet'

Commercial lines rate increases moderated in July and the market has become “quiet” due to the time of year and lack of catastrophic events, according to MarketScout's chief executive.

Dallas-based MarketScout notes that after four months of year-over-year 5 percent rate increases, July rate increases eased to 4 percent compared to the same period last year. MarketScout says commercial auto, workers' compensation, directors and officers and employment practices liability insurance rates all moderated by 1 percent, while fiduciary rates were up slightly from plus-2 percent to plus-3 percent. 

MarketScout CEO Richard Kerr says,  “The market is quiet. Many underwriters, insurers, and brokers are on holiday after securing their July 1 renewals. Without any catastrophic events, it is natural to see the market drift downward. We will have a much better feel for where things are headed once the results are tabulated for September and October.”

By account size for July, MarketScout says rate increases for Jumbo (premium over $1 million), medium (premium $25,001 to $250,000) and small (up to $25,000) accounts remained unchanged at 2 percent, 5 percent and 6 percent respectively. Increases for large accounts ($250,001 to $1,000,000 premium) moderated from 4 percent to 3 percent. 

By industry classification, every industry group except for public entity business moderated by 1 percent, says MarketScout. The contracting, service and transportation industries all saw increases of 5 percent versus 6 percent in June, while manufacturing and habitational saw 4 percent increases in July versus 5 percent in the previous month. Rates for energy risks were up by 3 percent, compared to 4 percent in June, and public entity was unchanged at up by 2 percent.

MarketScout's report follows a Council of Insurance Agents and Brokers Q2 survey that also showed some moderation in rate increases. CIAB says its quarterly survey of insurance rates shows while prices continue to climb, the rate of increase fell a little more than a full point on average from the first quarter to 4.3 percent.