For the first time in twenty months there are signs that commercial insurance rates have risen, according to MarketScout’s composite rate index for commercial accounts in the United States.
The rise of 1% is not significant, but that fact that rates have risen at all could be, as the commercial insurance market is now a target of so many global reinsurers.
Any sign of better pricing there could increase the shift from reinsurance into commercial primary lines, as the largest reinsurers in the world look to work increasingly directly with the largest commercial insurance buyers.
Richard Kerr, CEO of MarketScout explained the first quarter rate environment as follows; “The plus 1 percent composite rate index was driven by larger rate increases in commercial auto, transportation, professional and D&O rates. We also recorded small rate increases in the majority of coverage and industry classifications. So, 2017 begins with insurers moving away from the rate cuts of 2016.”
However rate movement is by no means sustained, with this just being the first time upwards movement has been recorded in so long. Additionally fluctuations and downward pressure is still seen in some areas of the market.
Business interruption, inland marine, workers’ compensation, crime, and surety coverages all saw rates holding steady in the first quarter of 2017. Rates for all other coverages either moderated or increased, MarketScout said.
Perhaps also showing that this trajectory could be a sign of something more sustained, by industry class every sector experienced a move toward higher rates in the first quarter, with transportation seeing the largest rate increase at plus 5 percent.
It’s an interesting dynamic and interestingly, perhaps less so to large reinsurers, its the smaller accounts that are seeing the rate increases, while large accounts and areas of high competition such as commercial property are still declining.