November Composite Rate Minus 1%
Commercial insurers across the United States continued their yearlong trend of moving rates ever so slightly. The composite rate moderated from minus 2 percent in October to minus 1 percent in November.
Richard Kerr, CEO of MarketScout outlined the recent rate changes as follows, “The most notable coverage classification with an ongoing consistent rate increase is commercial auto at plus 3 percent. The commercial auto classification includes all types of commercial vehicles. Not surprisingly, the most notable industry classification with an ongoing consistent rate increase was transportation, also at plus 3 percent. The transportation classification includes trucking, hauling, buses, and most anything with wheels. Railroads and aviation are not included in the transportation class.”
Kerr also stated, “Underwriters have long struggled with commercial auto, many writing the coverage only to capture the related casualty lines such as workers compensation, general liability, and excess. Many insurers consider commercial auto as a loss leader.
“Transportation accounts may well be one of the most penalized industry classifications if and when the next hard market arrives. Many smart insurers have lost their shirt in transportation. The recent exit of several insurers will inevitably create opportunities for new insurers willing to give transportation a try. Those exiting the trucking business do so with a parting quip of ‘good luck’ to the new insurers as they feel the class is simply too unpredictable to secure a consistent profitable loss ratio.”
By coverage classification, the following adjustments were made from October to November; property was down from minus 2 percent to minus 3 percent, BOPs were up 1 percent as compared to down 1 percent, auto was up 3 percent from up 2 percent and D&O was up 1 percent from flat.
Examining accounts by premium size revealed small accounts (up to $25,000) were flat in November as compared to down 1 percent in October. Medium accounts ($25,001 to $250,000) were down 1 percent in November as compared to down 2 percent in October. Large accounts ($250,001 to $1,000) enjoyed more aggressive pricing with rates down more in November (minus 2 percent) as compared to October (minus 1 percent). Jumbo accounts (over $1,000,000) remained stable at minus 2 percent.
Insurers reversed their rate reductions for the contracting and service industries, moderating rate reductions from minus 2 percent in October to minus 1 percent in November. Manufacturing rates were flat in November as compared to down 1 percent in October.
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.
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