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July P&C Composite Rate Steady, Transportation Increases

The property and casualty composite rate for July was the same as June’s rate, which was minus 1%, MarketScout reported today, adding that insurers are working to stop the downward trend.

“While insurers continue to grant minor rating concessions, many are pushing for an end to any further rate reductions,” Richard Kerr, CEO of MarketScout said in a statement. In the transportation sector, however, pricing is increasing “on all but the very best accounts. The poor loss experience in transportation has prompted underwriters to demand rate increases and restrict underwriting appetite.” Insureds that are unable to convinceBarometer underwriters they can control losses are left with few options “and ultimately end up paying a much higher rate/premium which impacts their profit margins,” he said.

Kerr continued that insurance buyers in the transportation industry are complaining about the lack of cooperation they are seeing from insurers as they try to manage their risk portfolio. “Business owners and corporate CEOs are concerned their insurance premiums will be larger than what was budgeted therefore negatively impacting net profits,” he said.

He advised these insureds to “allocate capital towards implementing loss control and companywide safety programs. That is how they will get cooperation from their insurers.”

A comparison of June 2016 to July 2016 rates by coverage classification reveals that workers compensation and property coverages were the most aggressively priced at minus 2%. Business interruption, business owners policies (BOP), fiduciary and directors & officers all moderated by moving rates from minus 1% to flat, or no increase. Professional liability rates moved from down 2% to down 1%. Rates for all other coverages were unchanged.
Rates-coverage class

There were no rate adjustments by account size from June to July.
Account size

By industry classification, rates for public entities moved up from minus 1% in June to flat or no increase in July. Transportation accounts were assessed at the largest rate increases from up 1% in June to up 3% in July, according to MarketScout.
Industry class

Competition Drives Commercial Rates Down 4% in January

The composite rate for property and casualty business placed in the United States measured minus 4% in January. Rates dropped from minus 2% in December 2015 to minus 5% in January 2016, MarketScout reported.

“Commercial property insurers are getting ready to scratch each other’s eyes out as they fight for market share,” said Richard Kerr, CEO of MarketScout. “We see nothing to PC Trendsprevent commercial property rates from dropping further.”

In addition to commercial property, business interruption, BOPs, professional liability, and D&O coverages were all more competitively priced in January compared to December 2015. Umbrella/Excess liability and workers compensation rates actually increased slightly over the same period, he said.

Transportation companies were assessed rate decreases of 4% in January 2016 versus 2% in December 2015. Rates for manufacturing and energy accounts were slightly higher in January 2016 than in December 2015. All other industries remained unchanged.

By accounts size, rates for small and medium sized accounts (all under $250,000) were more competitive in January 2016 than in the prior month. Large and jumbo accounts (over 250,001) were assessed rates slightly higher in January versus December.

Summary of the January 2016 rates by coverage, industry class and account size:
Coverage2 Industry3 Account