PIA: Agencies See Significant Underwriting Changes in Homeowners Market

May 22, 2013

The Professional Insurance Agents’ (PIA) recent survey of more than 400 independent agencies showed significant market changes in the Northeast — with the homeowners insurance and commercial property market appearing to be most affected by the shift.

More than 400 PIA association members from Connecticut, New Hampshire, New Jersey and New York responded to questions regarding changes in pricing, remarketing, underwriting, nonrenewals and the use of wholesalers. The survey was conducted in late March through early April.

The shifting market is pushing independent agencies to increase remarketing, the survey said. Overall, PIA members responded that, on average, they are remarketing 11 to 15 percent of their business. The majority of respondents reported increased remarketing — with 93 percent of respondents saying they needed to boost their remarketing efforts over the last year.

PIA and Professional Insurance Agents of Connecticut, New Hampshire, New Jersey and New York (PIACT, PIANH, PIANJ and PIANY) represent a partnership of four state trade associations for independent insurance agencies, brokerages and their employees throughout their respective states. The following are survey results courtesy of PIA.

Homeowners

The association said 95 percent of members responding in the survey indicated new business price hikes for the homeowners insurance, with nearly half reporting increases in the range of 6 to 10 percent. Additionally, 45 percent of the responses reported a significant or extreme change in the underwriting approaches to homeowner policies. The association said this is a direct result of the recent changes in the market, including the result of Superstorm Sandy. Approximately 45 percent of respondents reported a moderate to extreme increase in nonrenewals — with even more dramatic changes for businesses in coastal areas.

Personal Auto

The PIA said personal auto appears to have been least affected by the shifting market. The PIA survey respondents described an average price hike of 0 to 5 percent on new business, with 8 percent of respondents indicating price decreases. Approximately half of the respondents said underwriting changes are minor or have stayed the same. Some 71 percent of the respondents saw no change or minor increases in the frequency of nonrenewals.

Commercial Property

The PIA survey found that commercial property, like homeowners, appears to be suffering a significant impact from the shifting market. The association said 96 percent of respondents reported pricing hikes on new business, while 97 percent reported price increases on renewals. More than 50 percent of the respondents said the most frequent price hikes were in the range of 6 to 10 percent, with additional 21 percent seeing price hikes in the 11-to-15 percent range. About 30 percent reported they are seeing significant or extreme shifts in underwriting guidelines, though little changes were reported in the nonrenewal activity.

Commercial Liability

The survey found that commercial liability appears to be less affected by the market change. The respondents said they are seeing, on average, a price increase range of 6 to 10 percent. More than 60 percent of the respondents said they saw little to no change in nonrenewals, with minor changes in underwriting guidelines.

Use of Wholesalers

The PIA survey also found that while the market is changing, the use of wholesalers has not increased substantially. The survey said 37 percent of respondents indicated that they are placing less than 5 percent of their business through wholesalers.

Source: The Professional Insurance Agents (PIA)

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