Commercial property/casualty pricing continued to gently creep upwards in the second quarter, however signs of some moderating of increases also surfaced.
The Council of Insurance Agents & Brokers’ quarterly Commercial P/C Market Index Survey revealed that, on average, pricing rose at a rate of 4.3 percent compared to 5.2 percent in the first quarter of 2013.
Small and medium account pricing continued to rise more than pricing for large accounts.
“There weren’t any great surprises in the second quarter,” said The Council’s President/CEO Ken A. Crerar. “Prices inched up, underwriting tightened and insurers looked to reduce exposure in some critical areas. However, the market hardening appears to have moderated in the last quarter.”
Crerar said the critical areas continued to be property and workers’ compensation. The second quarter survey also showed that insurers were still feeling the sting of Superstorm Sandy. In fact, insurers were looking carefully at any catastrophe-prone property exposure on the coast or inland. Brokers across the country reported that insurers were using more wind/hail deductibles, according to The Council, which represents large commercial insurance and benefit brokers.
Brokers also told The Council that carriers pulled back on terms and conditions and lowered limits and cover for exposures, such as storm surge, flood and off-site power, among others.
Workers’ compensation again was a tough sell, particularly where loss experience was poor. A broker in the Northwest reported that workers’ compensation was the line with the strongest rate increases and non-renewals and some brokers across the country reported that carriers are backing away from the line.
Demand for insurance appeared to hold steady in the second quarter, according to the brokers responding, an indication that the economy is slowly recovering.
The survey showed that the top concern among brokers continued to be finding young talent to fill the shoes of the retiring broker force. Uncertainty surrounding health insurance reform also remained a great concern, according to the survey.
The research was done by Barclays Research based on The Council’s data.
Average Q2 2013 Commercial Rate Increases Slowed
|Low (Q307)||-10.0% (Q108)||-15.0%||-15.9%||-13.3%|