Year-End Pricing Update: P-C Rates Continue to Hover Near Flat

November marked a slight uptick in average commercial insurance pricing, from -2% to -1%, while personal lines rates held steady at +1%, according to the latest MarketScout pricing survey.

The commercial lines composite dropped in October but has now returned to -1%, where it sat for the four prior months. In November, commercial property was the only coverage class to mark a pricing decrease, from -2% in October to -3%. Meanwhile, rates for business owner policies, commercial auto and D&O all inched up by a percentage or two.

Commercial auto is experiencing the most notable ongoing consistent rate increase of all coverage classifications, landing at +3% in November. “Underwriters have long struggled with commercial auto,” says Richard Kerr, MarketScout CEO, who cites the common tactic of only writing the coverage to capture related casualty lines like workers comp, general liability and excess. “Many insurers consider commercial auto as a loss leader.”

By industry class, transportation is in a similar upswing, also clocking +3% last month. “Transportation accounts may well be one of the most penalized industry classifications if and when the next hard market arrives,” Kerr predicts. “Many smart insurers have lost their shirt in transportation. The recent exit of several insurers will inevitably create opportunities for new insurers willing to give transportation a try.”

But insurers that are exiting the trucking business “do so with a parting quip of ‘good luck’ to the new insurers,” Kerr points out. “They feel the class is simply too unpredictable to secure a consistent profitable loss ratio.”

The only personal lines coverage to report a November increase was insurance for homes valued less than $1 million in Coverage A, where pricing inched upward from +1% in October to +2% in November. But rates for all other homeowners, auto and personal articles held steady, at +1%, +2% and flat, respectively.

“There is incredible competition in the traditional homeowners sector so the rate increase was unexpected,” Kerr explains. “Remember, rates vary month to month, so you need to look at multi-month trends to get an accurate measurement on rate trends.”

Jacquelyn Connelly is IA senior editor.