The IVANS Index – which tracks commercial premium renewal rates – rose sequentially in September for Commercial Auto and Umbrella, and declined sequentially for Business Owner Policy, General Liability, Commercial Property, and Workers Compensation, according to analysts at Keefe, Bruyette & Woods.
KBW expects commercial casualty rate increases to mostly gain steam (with some monthly fluctuation) over the next year in response to inadequate expected underwriting returns, while commercial property rates will probably decelerate as investors deploy more third-party capital toward primary property underwriting.
Furthermore, analysts think P&C pricing depends on whether expected returns are adequate for incremental capital providers.
For commercial casualty lines, KBW thinks they’re not – especially with reportedly accelerating loss trends – which points to steadily increasing rates.
On the other hand, KBW thinks AIG’s and Markel’s recent acquisitions of third-party capital managers (Validus and Nephila, respectively) points to more ILS participation in underwriting primary property lines, which will probably dampen commercial property rate increases
