Commercial P/C Rates Continue to Harden

November 20, 2000

Property/casualty rates for small, medium and large commercial lines continued to rise between July 1 and Sept. 30, according to The Council of Insurance Agents and Brokers’ Commercial Insurance Market Index for the third quarter 2000.

The report shows significant rate increases for four of the five commercial property-casualty lines: commercial auto, workers’ compensation, property, and general liability (see attached table). Fifty- four percent said there has been no change in umbrella pricing.

The Index is based on a quarterly survey of The Council’s member firms, who represent the top 1 percent of agents and brokers in the United States, and who place over 80 percent of all commercial insurance premiums.

Third quarter rate increases are particularly evident for medium-size commercial accounts. 97 percent of survey respondents reported higher prices from July to September, and over half of those, or 54 percent, reported that rates have increased more than 10 percent (in the previous quarter, 44 percent said rates increased more than 10 percent). T

hird quarter rates for small accounts rose more modestly, and may show some sign of leveling out. Seventy-three percent reported increases in that market (89 percent in second quarter), with 26 percent reporting increases of greater than 10 percent. Another 25 percent reported “no change” in the market compared to nine percent who reported “no change” in the previous quarter.

For large accounts, 88 percent reported some rate increases (85 percent previous quarter), with 49 percent of those indicating increases of more than 10 percent. Only 38 percent reported more than a 10 percent jump in rates in the second quarter. Rates for auto, workers’ compensation, property, and general liability continue to harden as well.

Auto took a leap forward with 90 percent reporting that rates were either “somewhat hard” or “very hard” (80 percent reported a market hardening in previous quarter); 27 percent said workers’ compensation rates were “very hard” (16 percent in previous quarter); and 18 percent reported property rates were “very hard” (compared to 13 percent in previous quarter).

Group medical rates showed another dramatic price jump for small, medium and large accounts. Nearly 60 percent of those polled said rates for small and medium accounts increased more than 10 percent. Forty-four percent said rates for large accounts increased by more than 10 percent. Seventy-seven percent reported rate increases overall for large medical accounts.

Through its quarterly survey, The Council documents trends in property- casualty rates throughout the U.S. and by region. The third quarter survey, covering the period from July 1 – September 30 was sent to 250 Council members firms from throughout the U.S. The results are based on 100 responses from all regions.

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