Commercial P/C Prices Increase In Q4: And The Biggest Movers Are…

The close of 2013 saw a small reduction in property/commercial price increases, according to the Council of Insurance Agents and Brokers’ quarterly Commercial P/C Market Index Survey, released on February 11.


Account Size Breakdown

According to the CIAB data, average pricing increased for large, medium, and small accounts at a rate of 2.1 percent, down 1.3 percent from the third quarter of 2013.

“We didn’t see any significant changes last quarter, which is not surprising,” said Ken A. Crerar, president/CEO of The Council. “Underwriting seems to have remained disciplined. It appears that new capacity in the market, such as the arrival of Berkshire Hathaway Specialty Insurance, helped dampen pricing a bit last quarter. That, and the fact that catastrophe exposures were low, added up to a more stable pricing environment overall.”

Large account pricing increased at the smallest rate in Q4 with a bump of just 1.4 percent, while medium accounts rose at 2.4 percent and small, 2.6 percent.

In Tuesday’s press release, CIAB stated that some lines, such as commercial property, employment practices liability, and workers’ compensation, showed “signs of flattening in the fourth quarter — declining slightly more than some other lines.” However, the release stated, “brokers’ experiences on those lines varied across the country depending on location and circumstances.”

For example, according to the data, workers’ comp in California continued to show “significant rate increases.”

The survey also showed that, nationwide, brokers characterized “carriers’ appetite for new business” as “healthy and aggressive,” with more “willing to negotiate rate increases on good existing business,” though “terms and conditions continued to be pretty tight outside of one off relaxations … on the part of standard carriers.”


Underwriting And Cyber Liability Insurance

The CIAB noted that reports were mixed on underwriting capacity in that some brokers reported an increase in capacity “across all lines of business,” while others reported “no change,” or said “it depends on the carrier.”

“Flood, property CAT re-insurance and construction risks were reported up in the Northeast, while earthquake capacity was reported up in the Pacific,” the report added.

As for cyber liability insurance, brokers reported a heavier interest in the product line, no doubt driven by some significant security fails from major companies, such as Target. “This is just the tip of the iceberg,” said an unnamed broker from the Midwest. “As the business technology landscape evolves, cyber and technology Errors & Omissions continue to integrate further.”


What Keeps Brokers Up At Night?

When it came to other topics, some of the standouts, noted CIAB, were those keeping brokers up at night — talent acquisition and development as well as “perpetuation of account managers.”

Furthermore, implementation of new technology and “lack of leadership” in Washington were considered “major” problems.

Of the leadership worries, that’s a sentiment shared by most customers. Currently, Congress is at a 12 percent approval rating among American citizens, while the President fared somewhat better (but still below average) with a 40 percent approval and 52 percent disapproval, according to Gallup polling numbers at the time of this post.

For a closer look at the survey’s findings, check the full results here:


In Summary

While broker experiences varied throughout much of the US, average price increases stayed fairly stable with small and medium accounts posting the largest increases. If the Q4 trend stays on course, 2014 could see more of the same, including a mixed bag on underwriting capacity and increased interest in cyber liability insurance (with more major security breaches expected to drive the interest). Last but not least, brokers will continue to invest the lion’s share of their worries on finding the right people, developing that talent, implementing new technologies, and navigating the leadership cues funneling down from Washington.

Share this Article
Farmers - The Hartford - State Farm - Kemper Direct - Nationwide - Allstate - New York Life