First Quarter 2017 Sees Upward Rate Movement

U.S. insurance buyers may see higher rates this year, as the composite rate index for commercial accounts increased plus 1% for the first time in 20 months, MarketScout reported today.

Rates for business interruption, inland marine, workers compensation, crime, and surety coverages held steady in the first quarter, while rates for all other coverages either moderated or increased.

“The plus 1% composite rate index was driven by larger rate increases in commercial auto, transportation, professional and D&O rates,” Richard Kerr, CEO of MarketScout said in a statement. “We also recorded small rate increases in the majority of coverage and industry classifications. So, 2017 begins with insurers moving away from the rate cuts of 2016.”

Small accounts (up to $25,000) were assessed a 1% rate increase in the first quarter of 2017. Medium accounts ($25,001 to $250,000) were flat, while both large ($250,001 to $1 million) and jumbo accounts (more than $1 million) saw rate decreases of minus 1% and minus 2% respectively, MarketScout said.

By industry class, every industry experienced a move toward higher rates in the first quarter, with transportation seeing the largest rate increase at plus 5%.

2016 Ends with 1% Average Rate Reduction

The year ended with few surprises in commercial insurance pricing in the United States, after 2016 started out with a composite rate decrease of 4%. In ms-barometerApril, rates began to moderate and continued reductions of 1% to 2% per month. The year closed with a composite rate reduction of 1%, according to MarketScout.

While the soft market has been going for 16 months, that period seems longer because for the first eight months of 2016, the composite rate was flat to plus 1% before dropping into negative territory, MarketScout said.

“We have been tracking commercial property and casualty rates since 2001. Generally, the soft or hard market cycles last at least three years,” Richard Kerr, CEO of MarketScout, said in a statement. “We expect more moderate rate reductions for the coming year for all but a few lines of business.” An increase in interest rates could accelerate rate reductions, he added.

By coverage classification, commercial property moderated in December, from down 3% to down 2%. Workers’ compensation rates dropped from down 1% to down 2%. EPLI and crime were the only coverages that saw rate increases—both lines of coverage went up by 1% to up 2%. The composite rate for all other coverages was unchanged.
ms-coverage-class

By account size, there were no changes from November to December 2016.
ms-account-size

By industry classification, contractors adjusted from down 1% to flat. Transportation accounts saw ongoing rate increases across the board, jumping from up 3% in November to up 5% in December.
ms-industry-class

OSHA Releases Updated Workplace Safety and Health Voluntary Practices

To help medium and smaller-size businesses initiate effective safety and health programs, the Occupational Safety and Health Administration today released Recommended Practices for Safety and Health Programs, an update of its 1989 guidelines, reflecting changes in the economy, workplaces, and evolving safety and health issues. The recommendations feature a new section on multi-employer workplaces and a greater emphasis on continuous improvement, OSHA said.

“Since OSHA’s original guidelines were published more than 25 years ago, employers and employees have gained a lot of experience in how to use safety and health programs to systematically prevent injuries and illnesses in the workplace,” Dr. David Michaels, assistant secretary of labor for occupational safety and health said in a statement. “We know that working together to implement these programs will help prevent injuries and illnesses, and also make businesses more sustainable.”
osha-1

The recommendations include seven core elements for a safety and health program:

• Management leadership
• Worker participation
• Hazard identification and assessment
• Hazard prevention and control
• Education and training
• Program evaluation and improvement
• Communication and coordination for host employers, contractors and staffing agencies

Implementing recommended practices brings benefits to businesses that include healthier employees, fewer injuries and, ultimately, lower workers compensation costs:

osha-2

  • Preventing workplace injuries and illnesses
  • Improving compliance with laws and regulations
  • Reducing costs, including reductions in workers compensation premiums
  • Engaging workers
  • Enhancing their social responsibility goals
  • Increasing productivity and enhancing overall business operations

Because management leadership is an important part of the equation, OSHA recommends that business owners, managers, and supervisors:

  • Make worker safety and health a core organizational value.
  • Be fully committed to eliminating hazards, protecting workers, and continuously improving workplace safety and health.
  • Provide sufficient resources to implement and maintain the safety and health program.
  • Visibly demonstrate and communicate their safety and health commitment to workers and others.
  • Set an example through their own actions.

To establish a program, OSHA said organizations need to create a written policy signed by top management that describes the organization’s commitment to safety and health. By creating specific goals and objectives, management sets expectations for the company’s managers, supervisors and workers. The goals and objectives should focus on specific actions that will improve workplace safety and health, OSHA said.

Aug. P&C Rate Holds at Minus 1%; Auto, Transportation Up

The U.S. property and casualty composite rate for August was stable at minus 1%, the same as July, MarketScout reported. By industry classification, manufacturing, habitational and energy each moderated 1% , while all otherBarometer industry classifications remained unchanged.

“While the month to month composite rate is stable, there is clear movement in commercial auto and transportation accounts with each showing a year over year rate increase of plus 3%,” said Richard Kerr, CEO of MarketScout. “Insurers have decided it is time for commercial auto and transportation accounts to start paying up.”

By coverage, commercial property, workers compensation and professional liability each moderated 1% in August—to minus 1% for property, minus 1% for workers compensation and flat for professional liability. Commercial auto rates went up to plus 3%, while all other coverages remained unchanged, MarketScout said.
Coverage class 1

By account size the only adjustment was for accounts with more than $1 million premium, which adjusted from down 3% in July to down 2% in August.

Account size 3

Industry class 2