All material subject to strictly enforced copyright laws. © 2021 Insurance Insider is part of Euromoney Institutional Investor PLC.
Accessibility | Terms & Conditions | Privacy Policy | Modern Slavery Act | Cookies | Subscription Terms & Conditions

US commercial rates soften faster despite auto hikes

In the second quarter US commercial auto rates registered their highest rate increase since they started hardening in 2011.

Commercial auto change

Commercial auto prices rose by 6.1 percent in the quarter on average, up from 5.4 percent in Q1 2017 and continuing a trend of accelerated hardening over the last five quarters, according to the latest survey from the Council of Insurance Agents & Brokers (CIAB).

The organisation noted that some survey respondents had reported increases of as high as 15 percent for their commercial auto books of business.

Meanwhile, deteriorating loss ratios led to tighter underwriting as well as price increases, with some carriers not renewing accounts with poor experience.

US composite rate change

But the accelerated price rises in the loss-struck line of business were not sufficient to prevent the overall decline in US commercial insurance rates from speeding up in the period, according to the CIAB data.

Indeed, the CIAB report noted that as some carriers push for rate on commercial auto they are actually beginning to credit other soft lines, such as workers' comp, to offset the hardening auto trend.

And while talk continues of a stabilisation in softening, the CIAB survey was not alone in recording a pick-up in price falls last week, with Marsh also reporting that rate decreases had accelerated in the US and were now greater than the global rate of decline.

The CIAB survey put average rate reductions at 2.8 percent in Q2, a modest acceleration on the 2.5 percent decline across all account sizes in the first quarter.

The CIAB said that the movement was evidence of a market that appears to be stabilising in 2017, with rate reductions in the range of 2.5 percent to 3.3 percent through the last four quarters after pricing fell 3.9 percent in Q2 2016.

Rate change by line

Property led the way on softening once again in the second quarter, with prices off 3.6 percent, following a 3.1 percent decline recorded in the first quarter survey and a 4.4 percent average reduction in Q4 2016.

General liability and workers' comp rates were each down 2.7 percent, representing a pick-up in softening from the first quarter.

Business interruption rates were down 2.0 percent, with umbrella pricing falling by 1.4 percent and construction by 1.2 percent.

Directors' and officers' liability and employment practices liability business both registered modest hardening at 0.2 percent, while surety prices were almost flat at 0.1 percent.

The Marsh report said that its US composite saw insurance rate decreases of 2.6 percent, up from 1.5 percent in Q1.

Property remained the softest line, with a 3.6 percent fall, but casualty was the biggest mover overall, as pressure on workers' comp pricing led to a swing from a modest 0.4 percent increase in Q1 to a drop of 2.3 percent in Q2.

Both the CIAB and Marsh highlighted a soft cyber market, with rate falls of 1.44 percent and 1.50 percent respectively, despite the high profile WannaCry ransomware attack and NotPetya virus.

"One contributing factor to the rate movement for cyber is increase in capacity due to the expansion of risk appetite from existing cyber markets, and the entrance of new insurers into this product area," suggested Marsh.

US Q2 rate movements


We use cookies to provide a personalized site experience.
By continuing to use & browse the site you agree to our Privacy Policy.
I agree