Much-improved margins and the accompanying, and predictably widespread, desire for top-line growth should translate into steadily-declining personal lines rate changes, according to Keefe, Bruyette & Woods (KBW).
KBW expects most commercial lines’ rates to rise in response to weak underwriting profits, although workers compensation rates should keep falling, probably more slowly than in 2018.
Analysts at the firm expect 2018’s significant catastrophe losses (including 2017 events’ loss creep) and some insurance-linked securities (ILS) investor disappointment to boost reinsurance pricing.
Furthermore, there’s an expectation for overall economic growth to translate into slightly higher loss trends year-on-year for most lines of business.
KBW also models a reversion to “normal” loss levels, which should translate into higher year-on-year personal auto claim frequency that should pressure personal auto margins.
However, lower large loss/non-catastrophe weather losses should boost commercial margins, year-on-year.
