Slowly but surely, property-casualty insurance pricing continues to increase: In the second quarter of 2017, the composite rates for commercial and personal lines were up +1% and +2.5%, respectively, according to the quarterly MarketScout pricing survey.
Commercial auto risks assessed the largest rate hikes, with average increases clocking in at +4% in the second quarter compared to +3% in the first. Rate changes in commercial property and inland marine also increased, from -1% to +1%, and fiduciary was the only commercial class where rate changes decreased, from +1% to flat. Pricing adjustments in all other coverage classes held steady.
Small commercial accounts (up to $25,000) experienced average +2% rate increases, while pricing changes for midsize accounts ($25,001-$250,000) averaged +1% and large to jumbo accounts ($250,001 and up) saw average rate reductions of -1%.
“We now have two consecutive quarters of composite rate premium increases,” says Richard Kerr, MarketScout CEO. “Insurers are adjusting pricing as they should based upon losses incurred, expense loads and targeted returns on equity.”
Auto risks also assessed the largest rate increases on the personal lines side, with average pricing variations increasing from +3% to +4%. MarketScout found that insurance rates for homes valued less than $1 million increased around +2% in the second quarter, compared to +3% in the first.
Rates for all other personal lines classes held steady. As insurers and insureds head deeper into hurricane season, “storm activity will play an important role in rates for the next two quarters,” predicts Kerr, who points out that the composite rate reflects exposures across the U.S.—meaning rates in coastal areas may vary based more on exposure and recent loss experience.
“So far this year, inland wind and hail claims have been quite significant,” Kerr notes. “Also, personal auto losses are increasing. As a result, more rate increases could be coming.”
Jacquelyn Connelly is IA senior editor.