MarketScout: Soft Market Beckons

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.”

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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.

 

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