The 2012 first-quarter corporate earnings season is in a full swing — and that gives us a valuable opportunity to listen to top insurance CEOs and their perspective on pricing.
The Travelers Companies CEO Jay Fishman remained bullish about firming premium rates, though he stressed that price hikes are implemented carefully on a case-by-case basis.
“In business insurance, we continued to achieve improved pricing,” Fishman said during the April 19 earnings conference call.
“The renewal rate change in the quarter was a positive 8 percent, up from 6 percent in the fourth quarter of 2011, while retention remained stable.” He said the improved rate was broad-based, with rate hikes in all product lines between 6 and 9 points, with the workers’ comp and auto lines at the top end of that range.
He added that “importantly, we believe we differentiate ourselves from many in the marketplace by not taking a one-size-fits-all approach to pricing.”
“In our individual underwriting businesses, each customer’s needs, characteristics, geographies and risk and loss profile is different. As such, each transaction is analyzed and priced separately,” he said.
“We continue to leverage what we believe is industry-leading data and analytics to help us optimize rate and retention. That is, achieving higher retentions on our best customer relationships while simultaneously identifying the walk-away point for our least-profitable relationships.”
In the personal insurance segment, Fishman said, Travelers continues to take necessary steps to increase returns, which include improved pricing, terms and conditions. The renewal price change in the first quarter improved in auto and homeowners to 4 percent and 10 percent, respectively.
The Chubb CEO John Finnegan also sounded bullish during his company’s earnings call on April 20. “A continuation of this rate environment should bode well for our future profitability,” he said.
Chubb also saw an average 8 percent renewal rate increase for its U.S. commercial insurance, up from 6 percent in the 2011 fourth quarter, continuing the rate momentum that the insurer discussed on its recent earnings calls.
Chubb said it secured U.S. renewal rate hikes in each line of business during the first quarter. Monoline property rates rose the most, climbing by double digits, followed by workers’ comp, general liability, package, excess umbrella, auto, boiler and marine.
Further evidence of continued positive rate momentum can be found in the growing proportion of the insurer’s accounts that are renewing with rate hikes, the company said. In the first quarter, about 80 percent of Chubb’s U.S. accounts that renewed received a rate hike, compared to 70 percent in the fourth quarter of last year.