Premium renewal rates continue to see positive increases across nearly all major commercial product lines, according to the October results of the IVANS Index, which tracks commercial premium renewal rates.
IVANS, which is a division of Applied Systems, found that premiums increased across almost every major commercial line, with the exception of Workers’ Compensation, which experienced a slight downward shift.
The most pronounced increases were in Commercial Auto, which rose from 4.50% at the end of September to 4.81% at October; BOP, which rose from 3.57% to 4.08%; and General Liability, which rose from 2.29% to 2.74%.
Commercial Property also increased from 3.46% to 3.51% and Umbrella grew from 2.20% to 2.30%, while Workers’ Compensation fell from -2.69% to -3.20%.
“Year over year, premium renewal rates continue to trend positive across nearly all lines, with Workers’ Comp being the only commercial line that has remained negative for the year,” said Brian Wood, Vice President of Data Products Group.
“October’s IVANS Index demonstrates that Commercial Auto and Commercial Property continue to be among the most profitable lines of business,” Wood continued.
KBW added that it expects commercial casualty rate increases to gain momentum over the next year in response to inadequate underwriting returns, while commercial property rates will probably decelerate as investors deploy more third-party capital toward primary property underwriting.
The firm also suggested that P&C pricing would depend on whether expected returns are adequate for incremental capital providers, which is not currently the case for commercial casualty lines and points to accelerating rate increases overall.
On the other hand, AIG and Markel’s recent acquisitions of third-party capital managers Validus and Nephila points to more ILS participation in underwriting some large-account primary property lines, KBW said, which could somewhat dampen commercial property rate increases in 2019.