Commercial property/casualty pricing declined again with an average decline of 3 percent in the first quarter of 2011. But according to a new industry survey, the pace of pricing declines may be slowing down.
The market showed signs that the commercial lines P/C pricing may be flattening and modestly easing upward in some areas, says The Council of Insurance Agents & Brokers’ First Quarter Commercial P/C Market Index Survey. Overall, the rate of decline for commercial lines renewal pricing on average was 2.9 percent in the first quarter, compared with 5.4 percent in the fourth quarter of 2010.
“It’s too early to tell if the leveling off and modest price increases were a result of the fallout from the recent Japan disaster and other catastrophes earlier in the year, or if the market is reacting to broader market conditions,” said Ken A. Crerar, president of The Council.
The rate of decline for commercial renewal pricing for small and medium accounts was roughly similar to last quarter, the survey showed. On average, large commercial accounts showed a slight uptick in pricing.
There were modest increases in some commercial property rates, according to the survey. Workers’ compensation also showed price increases in some areas. General liability rates were generally flat.
Insurers are showing concern about future catastrophes.
A broker from the Southeast coast reported that “January-February showed reductions in almost every account with improved terms and conditions. Following the New Zealand and Japan earthquakes, the [Japan] tsunami, and the release of RMS 11, the CAT property underwriters started to show more discipline and have pushed for increases. Thus far, we have maintained flat pricing for the most part.”
Reflecting a slowly improving economic environment, demand for commercial products continues to pick up. Fifty-seven percent of the brokers responding to the survey said they saw an increase in demand, compared with forty-seven percent last quarter.
Competition with other brokers leads the major business headaches for brokers. They continue to worry about the economy and the budget deficit, but unease over health care reform has dropped to third place, but is nonetheless still significant.