Commercial pricing increases are expected to persist throughout 2020 as carriers continue to combat rising loss cost trends largely attributable to social inflation, according to Morgan Stanley analysis.
MS attributes social inflation concerns to several issues including an increasingly litigious environment, the opioid crisis and reviver statutes.
Furthermore, while industry commentary regarding social inflation has thus far centered on larger accounts, MS believes there is risk of spillover to smaller accounts.
With pricing movement by line of business largely reflecting movements in loss cost trends, Morgan Stanley notes how liability and commercial auto losses have suffered the most to date, and has reflected in their recent pricing movements.
Directors & officers liability, professional liability,and umbrella all saw material acceleration in 2019 as the true cost of elevated tort activity became more evident.
Workers’ comp has been the consistent outlier in the group, posting pricing decreases while all other lines see increases.
State regulator approval is required to change workers’ comp rates,and increases are unlikely to be approved given favorable frequency trends.
