Pricing in the U.S. commercial property/casualty market showed modest increases in the second quarter of this year, compared with the first quarter.
That’s according to The Council of Insurance Agents & Brokers’ Commercial P/C Market Index Survey. Nearly half of the brokers responding to the survey saw “no change” or a “1%-10%” price increase in small, middle and large accounts across the country.
“When you look at the trend line over the past year, pricing has steadily inched upwards,” said Ken A. Crerar, president of The Council. “It isn’t increasing by leaps and bounds, but there appears to be some momentum.”
On average, prices remained stable this quarter with negligible declines, compared with an average 2.9 percent decline for all accounts reported from the first quarter. The Council has been tracking commercial property/casualty rates since 1999. The survey represents a cross-section of commercial insurance brokers across the country.
The brokers in the survey said that carriers are getting tougher on terms and conditions and asking for more information on client risks. This trend was evident in the first quarter, as well, as carriers traded-off price increases for narrower terms and conditions.
“They [carriers] are reviewing and asking for more underwriting information, but the rates are still competitive,” a broker from the Southwest said. Another in the Northeast remarked, “More underwriting scrutiny; requesting more information about risks and loss control measures.”
Commercial property and workers’ compensation were the only two lines showing average increases. “Workers’ compensation remains the most volatile line of business,” according to a broker from the Midwest. A broker from the Southeast noted, “Workers’ compensation is receiving the most upward rate pressure along with coastal (CAT) wind property exposure.”
A few brokers commented on the impact the new hurricane catastrophe modeling program for property, RMS 11, is having on underwriting decisions. “Markets [are] reviewing the impact of RMS11 and some accounts have seen significant impact,” said one respondent. “Rate increases on wind driven CAT business [are] due to RMS version 11, and higher wind deductibles in critical CAT wind areas.”
According to survey responses, more brokers feel demand for insurance products had actually declined over the last quarter –– perhaps a reflection of the slow pace of the economic recovery. Excess capacity and competition remain as the brokers’ top market concerns, while the top political worry is the economy.
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