P&C Rates in the “Insurance Doldrums”

P&C Rates in the “Insurance Doldrums”

By Melissa Hillebrand, PropertyCasualty360.com

P&C rates continue to hover where they have for the past four months, remaining relatively
unchanged in June, according to distribution and underwriting company MarketScout.

“We are in the insurance doldrums,” Richard Kerr, MarketScout’s CEO, said in a statement.
“The absence of rate movement could be yet another signal that insurers simply are not going to
participate in a price-slashing war as was done in previous market cycles.”

Rates in just one type of coverage class–Business Interruption–were down for June, at -1%.
Commercial Auto posted the largest gains, at 2%. Commercial Property, Business Owners’ Policy,
Workers’ Compensation, D&O and EPLI were all up 1% in June.

When broken out by industry, Habitational–the line that provides coverage for owners of
condos, apartment buildings and other multi-unit dwellings–saw the largest increase, at 2%. Public
Entity and Transportation rates were up 1% each, while Manufacturing, Contracting, Service and
Energy remained flat.

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When analyzed by account size, it pays to be small: Rates for such accounts (up to $25,000 in
size) posted a 2% increase. Rates trickled down as accounts became larger: Medium accounts are up
1%, but large accounts are down 1% and jumbo accounts are down 2% in June.

For this report, MarketScout analyzed pricing surveys conducted through The National
Alliance for Insurance Education and Research. Below, a summary of June 2015 rates by coverage,
industry class and account size, taken from MarketScout research:

By Coverage Class

Commercial Property
Up 1%

Business Interruption
Down 1%

BOP
Up 1%

Inland Marine
Flat

General Liability
Flat

Umbrella/Excess
Flat

Commercial Auto
Up 2%

Workers’ Compensation
Up 1%

Professional Liability
Flat

D&O Liability
Up 1%

EPLI
Up 1%

Fiduciary
Flat

Crime
Flat

Surety
Flat

By Industry Class

Manufacturing
Flat

Contracting
Flat

Service
Flat

Habitational
Up 2%

Public Entity
Up 1%

Transportation
Up 1%

Energy
Flat

By Account Size

Small Accounts
Up 2%
Up to $25,000

Medium Accounts
Up 1%
$25,001 – $250,000

Large Accounts
Down 1%
$250,001 – $1 million

Jumbo Accounts
Down 2%
Over $1 million

Steady pricing also is evident in personal lines, where the composite rate is up 1% in June,
MarketScout reports. This is the third straight month of 1% rate increases, a slight decrease when
compared to the year’s first quarter rate increases of 2%.

Kerr credits the steady rates to underwriting tools, catastrophe modeling and competition.
“Robust competition balances any attempts at price increases,” he says. “It seems we now have a very
solid foundation in the U.S. personal lines insurance marketplace.”

When broken down by account, in June Automobile rates remained unchanged from the
month previous, at 2%. However, Personal Articles rose a percentage point to 1%. Homeowners’
policies remained stable. Whereas policies under $1 million in value adjusted rates slightly from flat
to 1%, policies over $1 million in value decreased a percentage point, coming in flat for June.

Personal Lines

Homeowners under $1,000,000 value
Up 1%

Homeowners over $1,000,000 value
Flat

Automobile
Up 2%

Personal Articles
Up 1%

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