Entries tagged with “Market Conditions”.

Business interruption, commercial property, general liability, umbrella, and workers’ compensation were the lines brokers most often noted had a decline in rates in the third quarter of 2015, according to the latest Commercial P/C Market Index Survey from the Council of Insurance Agents & Brokers.

Broker comments came as The Council survey found rates decreased across all lines by an average of 3.1 percent in the third quarter, compared with a 3.3 percent decline in the second quarter of 2015.

Large accounts saw the largest decreases at 4.1 percent, followed by medium-sized accounts at 3.8 percent, and small accounts at 1.4 percent.

The ongoing buyers’ market was consistent across most lines of business, The Council noted, with a few exceptions, including commercial auto and flood both of which saw a slight uptick in rates. Flood continued to be viewed as a troubled peril, brokers said.

Flood insurance rates increased, especially in the Southeast and Pacific Northwest regions, as rate increases, assessments and surcharges continued to be implemented by the National Flood Insurance Program (NFIP) and Write Your Own Carriers.

Ken Crerar, president and CEO of The Council observed that while rates seemed stable and competition plentiful, the brokerage industry is keeping an eye on many factors that may have an impact on insurance placements going forward.

We heard from our brokers about the growing cyber insurance market, consolidation in the industry, and attracting and retaining talent.

These are long-term, macro-level issues that have been percolating for years.”

Check out latest I.I.I. information on industry financial results here.

Broker Willis has just published its commercial insurance rate predictions for 2016.

What’s the outlook for insurance buyers?

Overall, the property/casualty insurance market continues to soften and Willis predicts further softening ahead, fueled by relatively benign losses and an oversupply of capacity from traditional and non-traditional sources.

For 2016, 10 lines of insurance—property, casualty, aviation, energy, health care professional, marine, political risks, surety, terrorism and trade credit—are expecting decreases.

In contrast, just five lines of insurance—cyber, employee benefits, errors & omissions (E&O), fidelity and kidnap & ransom—are expecting increases.

The main exception to the overall softening trend is in cyber and E&O insurance, Willis reports, where the growing threat of cyber intrusion and data theft is sending rates upward.

By how much?

For retailers with POS (point-of-sale) exposures and large health care companies, rate increases are up to an eye-opening 150 percent at renewal, with additional increases on excess layers.

In fact most buyers of cyber insurance are seeing primary premium increases of up to 15 percent, Willis says. For smaller organizations (with revenues less than $1 billion) lower premium increases are typical.

What about terms and conditions?

Willis observes that underwriting requirements continue to rise and cyber insurers are also increasing retentions, reducing capacity and exiting certain sectors.

Despite the reduction in capacity by some carriers, available limits in the cyber marketplace are around $350 million to $400 million.

Willis also predicts the marketplace for first-time buyers of cyber insurance (except for POS retailers and large healthcare organizations) will continue with relatively favorable terms, conditions and pricing.

Willis offers this single piece of advice to buyers of cyber insurance:

In approaching the markets, be ready to identify key investments in security and privacy protections over the past policy year that will help differentiate you from your peers.”

The I.I.I.’s new paper Cyber Risks: Threat and Opportunities sheds more light on the rapidly evolving market for cyber insurance.

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.