Commercial property/casualty (P/C) rates declined for the ninth consecutive quarter across small, medium and large accounts in the first-quarter of 2017, while on average, rates across all business lines declined by 0.7%, according to the Council of Insurance Agents & Brokers’ (CIAB) latest report.
“Commercial premium pricing this quarter was consistent with what we saw in 2016. The market remained soft across most lines of business. Poor loss ratios in commercial auto continue to drive pricing upward, a trend we continue to see in accounts of all sizes for that particular line,” said Ken A. Crerar, President and Chief Executive Officer (CEO) of the CIAB.
An abundance of capacity from traditional and increasingly alternative insurance and reinsurance sources continues to add further downward pressure on rates in the commercial P/C industry and, despite rate reductions slowing when compared with last year, the expectation of a continuation of the softening market landscape suggests further pressures in the months ahead.
By account size, small sized accounts recorded rate declines of 1.4%, on average during Q1 2017, medium sized accounts fell by 2.4% and large accounts by 3.8%, resulting in an average decline of 2.5% across all account sizes. This compares to -3.3% in Q4 2016, and -3.7% in the first-quarter of 2016.
With the exception of commercial auto, which increased by an average of 5.4% in Q1 2017, all other lines of business reported rate declines in the first three months of 2017.
Commercial property, where reinsurance and increasingly alternative reinsurance capacity has the most influence, witnessed the steepest rate decline in the quarter, of 3.1%. While umbrella fell by 1.1%, general liability by 2.6%, and workers’ compensation by 1.9%.
This resulted in an average rate decline across all commercial P/C business lines of 0.7%, which is less dramatic than the 1.4% dip seen in the final quarter of 2016, and the 2.1% decline seen in the first-quarter of 2016, reveals that CIAB report.
