|The US property and casualty industry is continuing to assess rate increases as affirmed by the first quarter composite rate, which measured plus 2 percent. The only coverage that did not experience a year-over-year rate increase was workers’ compensation, which had a rate decrease of 2 percent.
By coverage classification, business interruption, inland marine and professional lines all raised rates by 1 percent more than they did in the last quarter of 2017. Only EPLI rates moderated.
When measured by account size, rates for medium accounts ($25,001 to $250,000 premium) increased from plus 2 percent in the final quarter of 2017 to plus 3 percent in the first quarter of 2018.
By industry group, service contractors, public entities, and energy accounts were assessed larger rate increases in the first quarter of 2018 than in last quarter of 2017. Transportation accounts had a quarter-over-quarter price decrease from plus 5 to plus 4 percent.
Richard Kerr, CEO of MarketScout noted, “Automobile and transportation exposures continued to experience the greatest rate increases due to increasing expenses and adverse claim development. Insurers are struggling with this segment of our industry. Part of the problem is actual underwriting results, part is expense ratios, and in our view, a larger part is the uncertainty of the long-term prospects for the auto insurance industry. The questionable future of auto insurance could be impacting insurers’ willingness to invest in new safety concepts, pricing models and distribution alternatives. Autonomous vehicles are going to change the auto insurance industry forever. Many tech firms are working hard to deploy new insurance alternatives, which reflect the lower claims frequency/severity anticipated by driverless or driver assisted trucking exposures. Traditional auto insurer opportunities will shrink unless they adapt their business model to get in the middle of the autonomous vehicle parade.”
The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout's analysis of market conditions. These surveys help to further corroborate MarketScout's actual findings, mathematically driven by new and renewal placements across the United States.
A summary of the fourth quarter 2018 rates by coverage, industry class and account size is set forth below.