Northeast PIA Survey Shows Prices Rising, But at Slower Pace

February 24, 2014

In the first month of 2014, the PIA affiliates in Connecticut, New Hampshire, New Jersey and New York conducted their second-annual Market Trends Survey and found that the heralded hard market may not be launching as expected. In fact, when compared to responses from last year, agents report to PIA that movement has slowed.

More than 200 respondents participated in the survey, which asked producers in the four states if their clients are experiencing increases or decreases on various lines of business (personal auto; homeowners; commercial property; and commercial liability) and if their carriers’ underwriting guidelines are tightening or relaxing over the past year.

Overwhelmingly, respondents told PIA that prices are rising, but PIA found that the rate at which this is happening has slowed down since last year.

Agents told PIA that business premiums are increasing in each of the four categories, with the majority of respondents noting an increase of 6-10 percent (53 percent for personal auto; 46 percent for homeowners; 47 percent for commercial property; and 54 percent for commercial liability).

However, a number of respondents also said rates have decreased or increased by less than 5 percent (11 percent for personal auto; 12 percent for homeowners; 4 percent for commercial property; and 7 percent for commercial liability). Likewise, renewal premiums for commercial lines mirrored these rate changes.

Agents also reported that their remarketing efforts have increased since last year. However, when PIA asked respondents to indicate what percentage of their business they had to remarket (less than 5 percent; 6-10 percent; 11-15 percent; 16-25 percent; or 26 percent or more), the numbers show a slowdown in the rate at which remarketing is taking place. In 2013, an overall measure of agents’ responses said they had remarketed 11-15 percent of their business; this year, that number dropped to the 6-10 percent category.

Breakdown of percent of commercial-lines business being remarketed. X axis = percent of respondents, Y axis = category answers.

Respondents reported that homeowners has seen the greatest change with regard to underwriting guidelines; and while carriers continue to enact restrictions, they are doing so with less vigor as well. When asked if underwriting guideline changes are the “same, minor, moderate, significant or extreme,” agents told PIA that changes remained the same as last year, with 36 percent of respondents calling the underwriting changes “significant.”

Homeowners underwriting changes, and the degree of change clients are experiencing.

PIA Director of Business Issues Jim Pittz said the rate increase is less dramatic compared to last year’s. “While a single year-over-year report gives us less certainty, this lack of substantial overall change in underwriting and price increase is something that has our attention,” Pittz said. “When we are still hearing from up to 20 percent of our members that changes are minimal, I’m not sure we can say the market is truly hardening.”

Professional Insurance Agents associations of the states of New York, New Jersey, Connecticut and New Hampshire (PIANY, PIANJ, PIACT and PIANH) are trade associations representing professional, independent insurance agencies, brokerages and their employees throughout their respective states.

Source: Professional Insurance Agents associations of the states of New York, New Jersey, Connecticut and New Hampshire

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