U.S. businesses buying property/casualty insurance in September saw a five percent rate increase on average, according to the latest index from MarketScout.
MarketScout said the composite rate for was up from plus 4 percent in August to plus 5 percent in September 2013.
Larger accounts continued to see smaller increases than smaller accounts. The same held true in September with small accounts (up to $25,000 premium) incurring average rate increases of 6 percent, medium accounts ($25,001 to $250,000) 5 percent, large accounts ($250,001 to $1,000,000) 3 percent and jumbo accounts (over $1,000,000) at only 2 percent.
By industry class, contractors are paying the highest rate increases at plus 6 percent followed by habitational, service and transportation accounts that are at plus 5 percent. Public entities had the smallest increase at plus 3 percent.
Commercial property and general liability coverages were up 6 percent. Automobile and Business Owners Policies were up 5 percent. The lowest increase as measured by coverage classifications was in Surety at plus 1 percent.
Richard Kerr, CEO of MarketScout, said that there are several medium-sized, publicly-traded insurance companies are encountering challenges and may be sold, restructured, or placed into run off “unless they structure some creative solutions to get them past their current financial crisis.”
“Very capable, smart insurance executives lead each of these firms. It just goes to show how quickly things can go wrong if an insurer experiences adverse loss development. Rates will increase if a few more companies experience similar deterioration,” Kerr commented.
The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout’s analysis of market conditions.
A summary of the September 2013 rates by coverage, industry class and account size is set forth below.