Commercial Rates Continue on Slow Slide; Personal Lines Rates Moderate: Survey

November 5, 2014

The composite rate for U.S. commercial insurance was plus 1 percent in October 2014 while the composite rate for U.S. personal lines was plus 3 percent for the month, according to MarketScout’s monthly analysis of market conditions.

“As expected, the U.S. composite commercial rate continues its slow slide,” said Richard Kerr, CEO of MarketScout. “We are almost completely past hurricane season, so we expect continued pressure on property rates. Workers’ compensation rates are also down from last month; however, a few large insurers could be facing some challenges on their comp book. If so, this could moderate the slide in workers’ comp premiums.”

When measuring rates by coverage, rates were the same as in the prior month with the exception of automobile and professional liability, which were up 1 percent from the prior month to plus 3 percent and plus 2 percent respectively. Property and workers’ compensation rates were more competitive as rates for both lines of coverage were reduced by 1 percent.

By account size, only small account rates changed from the prior month as they decreased from plus 3 to plus 2 percent. Rates for all other account sizes remained the same.

By industry, only manufacturing and energy risks experienced a rate increase as compared to last month, both going from plus 1 to plus 2 percent. Contracting, service, and transportation were all down an additional 1 percent. All other industries remained unchanged when compared to September.

A summary of the October 2014 rates by coverage, industry class and account size is set forth below.

By Coverage Class
Commercial Property Up 1%
Business Interruption Up 1%
BOP Up 2%
Inland Marine Up 1%
General Liability Up 2%
Umbrella/Excess Up 2%
Commercial Auto Up 3%
Workers’ Compensation Up 1%
Professional Liability Up 2%
D&O Liability Up 2%
EPLI Up 2%
Fiduciary Up 1%
Crime Up 1%
Surety Up 1%
By Account Size
Small Accounts Up 2%
Up to $25,000
Medium Accounts Up 2%
$25,001 – $250,000
Large Accounts Up 1%
$250,001 – $1 million
Jumbo Accounts Up 0%
Over $1 million
By Industry Class
Manufacturing Up 2%
Contracting Up 3%
Service Up 1%
Habitational Up 1%
Public Entity Up 1%
Transportation Up 2%
Energy Up 2%

Personal Lines

In personal lines, homeowners insurance in the U.S. increased 3 percent in the aggregate for October 2014 regardless of the home value. Automobile rates were plus 2 percent, the same as in September. Personal articles rates also remained steady matching the plus 1 percent from September.

“Personal lines insurers are going to have a good 2014, despite a large number of micro storms, which resulted in notable claims activities,” Kerr said. “Rates should remain stable and actually adjust downward a bit more by year end.”

A summary of the October 2014 personal lines rates is set forth below.

Personal Lines
Homeowners under $1,000,000 value Up 4%
Homeowners over $1,000,000 value Up 3%
Automobile Up 2%
Personal Articles Up 1%

The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout’s analysis of market conditions. These surveys help to further corroborate MarketScout’s actual findings, mathematically driven by new and renewal placements across the United States.

Source: MarketScout

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