Entries tagged with “Market Conditions”.

The percentage of businesses purchasing commercial insurance increased in the second quarter of 2015, according to the latest Commercial P/C Market Index survey from the Council of Insurance Agents & Brokers (CIAB).

An overwhelming 90 percent of brokers responding to the survey said that take-up rates had increased, in part as premium savings drove interest in new lines of coverage and/or higher limits.

Cyber liability continues to gain traction, brokers noted, and this trend is expected to continue as the cyber insurance market matures, new insurers, products and capacity come to market and as companies realize the true extent of their cyber exposure.

Broker comments came as The Council’s analysis shows that rates declined across all commercial lines in the second quarter, continuing the downward trend from the first three months of 2015.

Premium rates across all size accounts fell by an average of 3.3 percent compared with a 2.3 percent decrease in the first quarter of 2015.

Large accounts once again saw the steepest drop in prices of 5.2 percent, while medium sized accounts fell 3.5 percent and small accounts fell 1.3 percent.

Commercial property, general liability and workers’ compensation premiums were most frequently reported down across all regions, with a slight uptick in commercial auto.

Ken Crerar, president and CEO of The Council said:

As the soft market continues in 2015, carriers are competing for good risks and are willing to work with brokers on price and terms.”

Meanwhile, average flood insurance rates saw an uptick across all regions, most frequently in the Southeast and Southwest regions, the Council noted.

This increase is likely due to premium increases, assessments, and surcharges, mandated by both the Biggert Waters Act and the Homeowner Flood Insurance Affordability Act (HFIAA), which went into effect April 1.

Find out more about business insurance from the Insurance Information Institute (I.I.I.).

The average price of insurance for all U.S. businesses remained the same in April 2015 as it was in April 2014, according to the latest analysis from online insurance exchange MarketScout.

MarketScout CEO Richard Kerr noted that the market remained flat with a zero percent increase in April 2015, down from a 1.5 percent increase in October 2014, continuing the downward trend of the last eight months.

Kerr said:

It’s not dramatic but it is a trend. Coastal property may experience some slight rate increases since we are on the cusp of the wind season. Rates on all other exposures should continue to be quite competitive.”

By coverage classification, rates for business owners policies (BOP), professional liability and D&O coverages decreased in April 2015 by one percent as compared to March 2015, MarketScout reported.

However, commercial auto coverage actually saw a 2 percent increase, while rates for all other coverages remained the same.

By account size, rates remained the same for all except jumbo accounts (over $1 million in premium) which adjusted to a rate reduction of minus 2 percent in April 2015, compared with rates the previous month, MarketScout said.

I.I.I. provides commentary on the P/C insurance industry financial results here.


Commercial insurance rates in the United States held steady in March, according to the latest analysis from online insurance exchange MarketScout.

The average property/casualty rate increase was flat or 0 percent compared to the same month last year. This compares to a slight rate increase of 1 percent in February 2015.

Richard Kerr, CEO of MarketScout, noted:

March is an important month. There is a considerable volume of U.S. business placed with both the U.S. and international insurers. While a small change from February, the downward adjustment in rates may be an indicator of what is to come for the next six months.”

General liability and umbrella/excess liability were down at flat or 0 percent in March from up 1 percent in February.

No line of coverage reflected a rate decrease, while the largest rate increase by line of coverage was 1 percent.

By account size, large accounts ($250,000 to $1 million premium) were flat as compared to up 1 percent in February. Small accounts (up to $25,000 premium) adjusted downward from up 2 percent to up 1 percent. Rates for all other accounts were unchanged.

Business Insurance reports on this story here.

For a broader look at the p/c insurance market, check out industry financial and results commentary from the I.I.I.

A new report from across the pond points to a large gap in awareness when it comes to cyber risk and the use of insurance among business leaders of some of the UK’s largest firms.

Half of the leaders of these organizations do not realize that cyber risks can be insured despite the escalating threat, the report found.

Business leaders who are aware of insurance solutions for cyber tend to overestimate the extent to which they are covered. In a recent survey, some 52 percent of CEOs of large organizations believe that they have cover, whereas in fact less than 10 percent does.

Actual penetration of standalone cyber insurance among UK large firms is only 2 percent and this drops to nearly zero for smaller companies, according to the report.

While this picture is likely a result of the complexity of insurance policies with respect to cyber, with cyber sometimes included, sometimes excluded and sometimes covered as part of an add-on policy, the report says:

This evidence suggests a failure by insurers to communicate their value to business leaders in coping with cyber risk. This may, in part, reflect the new and therefore uncertain nature of this risk, with boards more focused on security improvement and recovery planning than on risk transfer. It nevertheless risks leaving insurance marginalized from one of the key risks facing firms.”

Senior managers in some of the UK’s largest firms were interviewed for the report published jointly by the British government and Marsh, with expert input from 13 London market insurers.

As a first step to raising awareness, Lloyd’s, the Association of British Insurers (ABI) and the UK government have agreed to develop a guide to cyber insurance that will be hosted on their websites.

Reuters has more on the report here.

What a difference a year makes. Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS) shows that commercial insurance prices rose again by 3 percent in aggregate during the third quarter of 2014, drawing a line after five consecutive quarters of moderating price increases.

The chart below compares the change in price level reported by carriers on policies underwritten during the third quarter of 2014 to those charged for the same coverage during the third quarter of 2013.


Towers Watson noted:

Price changes reported by carriers mark a pause in the moderation of price increases observed in the prior five consecutive quarters, following increases of between 6 percent and 7 percent, as reported in the second half of 2012 and first half of 2013.”

Price increases were fairly similar to those reported one quarter ago for most lines, but continued moderation in workers compensation and some specialty lines was offset by flat pricing in property.

The employment practice liability line, followed by commercial auto reported the largest price increases, Towers Watson said. Price increases for most lines fell in the low single digits.

Commercial property data indicated no rate change following a slight price decrease one quarter ago. When comparing account sizes, price increases were more moderate for large and specialty accounts than small and mid-market accounts, Towers Watson added.

Insurance Journal has more on this story here.

For the most recent survey, data were contributed by 43 participating insurers representing approximately 20% of the U.S. commercial insurance market (excluding state workers compensation funds).



Just in time for the peak of hurricane season, our updated paper on the residual property market is hot off the press.

At first glance the numbers on the property insurance provided by the nation’s FAIR and Beach and Windstorm plans indicate that attempts by certain states to reduce the size of their plans appear to be paying off.

As you’ll see, the exposure value of the residual property market in hurricane-exposed states has declined significantly from the peak levels seen in 2011. In fact between 2011 and 2013, total exposure to loss in the plans fell by almost 30 percent – from $885 billion to $639 billion.

Why such a drop?

Florida Citizens, a plan that accounts for more than half (51 percent) of the total FAIR Plans’ exposure to loss, saw its exposure drop by nearly 50 percent from $429.4 billion in 2012 to $228.9 billion in 2013, as Citizens took much-needed steps to reduce its size.

This accounted for the overall reduction in total exposure under the FAIR plans. In 2013 total exposure to loss in the FAIR Plans was $445.6 billion, a 38 percent drop from its 2011 peak of $715.3 billion.

But what of the Beach and Windstorm plans?

Latest data show that between 2011 and 2013 exposure to loss in the Beach and Windstorm Plans actually grew by 14 percent.

Five state Beach and Windstorm plans are covered in our report: Alabama, Mississippi, North Carolina, South Carolina and Texas.

Over a longer time period, 2005 to 2013, the I.I.I. finds that some of the Beach and Windstorm plans saw accelerating growth. For example, total exposure to loss in the Texas Beach Plan (the Texas Windstorm Insurance Association (TWIA)) increased by 230 percent during this period.

A plan that would move TWIA’s policies over to private insurers and depopulate its book of business (much like Florida Citizens has done) is in the works, but so far nothing definite.

An ongoing and arguably more pressing concern is the fact that many of the residual market plans charge rates that are not actuarially sound and do not accurately reflect the risk of loss.

What does this mean? The I.I.I. warns that a major hurricane could expose residents in certain states to billions of dollars in post-storm assessments:

While hurricane activity in the most exposed states may have been lower in recent years, there is no question that over the long-term major hurricanes will cause extensive damage in future. This highlights how important it is for the rates charged by these plans to be actuarially sound.”

While the composite rate for U.S. commercial property and casualty insurance remains positive, at plus 1 percent in August, it is closing in on flat or no increases and rate reductions are coming, according to online insurance exchange MarketScout.

Richard Kerr, CEO of MarketScout commented:

Insurers really don’t want to enter another era of rate declines; but in order to hold business, most of the market is being forced to moderate pricing. If this trend continues, we should see annual rate declines very soon.”


The key takeaways from MarketScout’s latest analysis:

– Property rates were actually up slightly at plus 3 percent in August.

– Business interruption was down one percent to flat, as were fiduciary and crime.

– Business owners’ policies and commercial auto moderated from plus 3 percent to plus 2 percent.

– Umbrella liability coverage moderated from plus 2 percent to plus 1 percent.

– Workers compensation rates were up from plus 1 percent to plus 2 percent.

– Rates as measured by account size and industry classification remained the same as in July 2014.

Bear in mind that August is traditionally a slower month for insurance placements so the volume of premium measured is less than normal.

Still, the findings tie in with the latest quarterly Commercial P/C Market Index Survey from the Council of Insurance Agents & Brokers released in July. It found prices for commercial p/c insurance continued to slide in the second quarter of 2014. On average, prices for small, medium and large accounts eased by a modest -0.5 percent during the second quarter, compared with 1.5 percent in the first quarter.


Commercial insurance rates in the United States slipped to plus 2 percent in June 2014 from plus 3 percent in May, according to latest analysis from online insurance exchange MarketScout.

Richard Kerr, CEO of MarketScout, said:

The commercial market continues to adjust downward as a result of improved underwriting results and an abundance of capacity. In the aggregate, rates are still up slightly but the trend for rate moderation continues.”

By coverage class, umbrella, workers’ compensation, D&O, and EPLI all moderated from the prior month with each registering a plus 1 percent rate increase.

Workers’ compensation rates slipped the most from plus 3 percent in May to plus 1 percent in June.

By account size, small (up to $25,000) and medium accounts ($25,001 up to $250,000) remained at plus 3 percent. Large accounts ($250,001 to $1 million) slipped from plus 2 percent to plus 1 percent and jumbo accounts (over $1 million) were up 0 percent or flat.

Kerr noted that this is the first plus 0 percent measurement since the market turned towards rate increases in November 2011:

It’s not surprising the jumbo accounts have gone flat as the name brand account continues to allure underwriters despite the lower ROE. There is a pricing benefit to being a name brand, Fortune 1000 insurance buyer.”

By industry class, manufacturing, transportation and energy all adjusted their month-over-month rate increases downward by 1 percent.

Check out latest information from the I.I.I. on financial results and market conditions.

Global insurance markets are seeing stronger growth, thanks to the economic upswing in many industrialized countries, according to an annual study by Munich Re.

Munich Re’s Insurance Market Outlook 2014 finds that rate increases in a number of high volume markets are also having a positive effect on premium growth.

At the global level, Munich Re expects real overall growth in primary insurance premiums at 2.8 percent this year and 3.2 percent in 2015, influenced mainly by stronger growth again in life insurance.

[In 2013, global insurance markets saw restrained growth of 2.1 percent in real terms, with primary insurance premiums in the life insurance segment growing by just 1.8 percent, due to a number of regulatory one-off effects.]

While in recent years dynamic growth in emerging countries has served as the decisive growth driver of global premium volumes, especially in property/casualty insurance, Munich Re notes that it is the industrial countries whose contribution to growth is currently increasing.

Many emerging countries are currently experiencing a cooling of their economies, and this is expected to have a dampening effect on premium growth in 2014 and 2015.

In the long-term however, Munich Re expects that emerging countries will continue to become more important for the global insurance markets.

The emerging Asian countries will see the highest increases, with their share of global premium volume expected to rise by 5 percentage points, from 9 percent in 2013 to 14 percent in 2020.

The Chinese market, already the fourth-largest primary insurance market with premium volume of over €210 billion in 2013, will more than double by 2020 to become the third-largest market worldwide, according to Munich Re.

The more than two-year upward trajectory in rates for commercial insurance in the U.S. is in jeopardy as U.S. insurers, supported by reinsurers, catastrophe bonds and insurance linked securities are finding ample reasons to start fighting over business, according to online insurance exchange MarketScout.

Richard Kerr, CEO of MarketScout noted that the composite rate for U.S. commercial insurance remained in positive territory increasing an average of 2 percent in April 2014, but warned that rate reductions are likely by year end if the current trend continues.

If you are in the market on a daily basis, you can almost feel a change in the wind. No reasonable insurer wants rate reductions. However, everyone seems to feel they are coming.”

By line of coverage, Kerr noted that catastrophic property rates will probably hold steady in the next four months with hurricane season about to start:

If the wind doesn’t blow, get ready for a solid round of rate reductions at year-end.”

On workers’ compensation, Kerr noted that it is and always has been a tough class of business with an extremely long tail:

In the last six months, several major workers’ compensation insurers have exited the market. Many others have dramatically cut back their writings. We expect workers’ compensation insurers to hold steady with small rate increases continuing.”

In its April market analysis MarketScout noted that rates for property, business interruption, BOP, umbrella, auto, workers’ compensation, and D&O all moderated one percent.

By account size, medium accounts ($25,001 to $250,000 premium) were down from plus 3 percent to plus 2 percent. Large accounts ($1 million plus premium) adjusted from plus 3 percent to plus 1 percent.

By industry class, rates for manufacturing, contracting, and public entities all moderated one percent.

Business Insurance reports on this story here.