US commercial P&C rates continue downward trend in Q3

A downward trend in US commercial property/casualty rates has continued into the third quarter of 2016, according to a market survey from The Council of Insurance Agents & Brokers (CIAB).

The average decrease in rates was 3.2 percent in the third quarter compared to the previous quarter, a slowdown from -3.9 percent in the second quarter of 2016.

Specifically, commercial property saw the strongest slowdown at -4.5 percent from -6.0 percent for the second quarter of 2016.

Prices in general liability fell 3.0 percent quarter over quarter (Q2: -3.6 percent) and workers' compensation declined by 2.6 percent (Q2: -4.3 percent).

“Rate decreases have been moderate but steady throughout 2015 and 2016,” said Ken Crerar, president and CEO of CIAB.

From this survey, large accounts had reported the largest decreases at -4.3 percent, followed by medium-sized accounts at -3.7 percent, and small accounts at -1.5 percent.

Consistent with the second quarter, rates decreased across most lines, with the exception of commercial auto and employment practices liability.

CIAB attributes this exception to the fact that commercial auto continues to be very difficult to place as carriers lack the appetite to take on additional exposure in that line and many are actively trying to shrink their exposure.

Commercial auto rates increased once again by 3.2 percent and employment practices liability increased slightly by 0.3 percent.

One broker from the southeast region of the US commented: “Property continued to be soft. Large schedules [received] lots of attention along with more flexibility in deductibles relating to wind/cat exposures.”

As workers’ compensation rates continued to decrease, one broker from the Midwest, warned that this may change as “cost shifting from group health claims to workers comp has really ramped up in the last six months.”

The 14.5 percent rate increase that was approved in Florida may also have an impact on workers comp rates in the Southeast region moving into 2017.

Crerar concluded: “Next quarter we’ll be keeping an eye out for two things: first, whether rates continue to decline even more as carriers aggressively compete to renew accounts and lock in new business as they look to close out the year strong. Second, what impact Hurricane Matthew has on property rates, especially in the Southeast region.”