Commercial P/C Pricing Declined in First Quarter

Commercial P/C Pricing Declined in First Quarter

By IFAwebnews Staff
National, Property-Casualty Insurance News

The commercial property/casualty market continued to soften in the first quarter of 2015,
according to The Council of Insurance Agents & Brokers’ most recent quarterly Commercial P/C
Market Index Survey.

On average, small, medium and large accounts fell 2.3%, compared with 0.7% in the 4th
quarter of last year. Large accounts saw the steepest drop of 3.7%, while medium sized accounts fell
2.7%. Small accounts were relatively flat.

“The trend of falling prices we saw in the fourth quarter of 2014, continued into the first
quarter of this year,” said Ken A. Crerar, president/CEO of CIAB. “Last quarter, buyers gained some
advantage as pricing slid across the board and across all regions for most lines of business.”

Crerar said a relatively calm catastrophe season, with the exception of the harsh winter in
the Northeast, helped push commercial property pricing down in most of the country, adding, “the
passage of TRIA reauthorization seemed to settle that market.”

Plentiful capacity continued to dampen pricing as carriers scrambled to book new business.
Most of the brokers responding to the survey reported an actively competitive market, according to
CIAB.

In the Northeast, brokers were quoted as saying carriers were “more aggressive” with a “much
broader appetite” and offered “lower deductibles, multi-year deals.” One broker said carriers were
“hungry, hungry, hungry.”

Midwestern brokers reported “aggressive carriers” and that “downward pressure on pricing
was greater than three months ago.”

Other regions reported similar trends: “Broader risk selection; more flexibility in terms,
conditions and pricing” (Southwest); “reduced deductibles higher capacity” (Southeast); and “soft
market, lots of property capacity” (Pacific Northwest).

Property pricing fell in most of the country for properties without CAT exposures or losses.
However, the Northeast coastal area, which was hit by record-breaking snowfall last winter, did see
some tightening and slightly higher deductibles for roof damage caused by ice damning.

Loss experience continued to be a factor in underwriting. While willing to negotiate on pricing,
carriers were still looking for good loss histories. One broker from the Midwest was quoted as saying:
“Good accounts being marketed got very competitive pricing. Bad accounts got increases”.

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