US commercial rates up by 2% in Q4
The US commercial insurance composite rate averaged an increase of 2 percent in the fourth quarter 2018, which matches the composite rate for the entire year of 2018 (up 2 percent), according to analysis by MarketScout, which compiles commercial and personal lines Market Barometers.
Transportation and commercial auto lines enjoyed the biggest rate increases in the fourth quarter at plus 6 and 7 percent respectively. Workers’ compensation measured a rate decrease in the fourth quarter of minus 1.5 percent.
Quarter by quarter the composite rate for 2018 hovered between plus 2 to plus 2.5 percent.
Richard Kerr, CEO of MarketScout noted, “Ample capacity remains in the commercial insurance market. Rates for all coverage classifications other than workers’ compensation are increasing at a controlled, slow pace. Only transportation and commercial auto exposures are suffering large rate increases.”
Meanwhile, personal lines insurers enjoyed an increased rate an average of 2.25 percent in the fourth quarter of 2018. The personal lines composite rate increase for all of 2018 was plus 2.5 percent.
Homeowners rates in the fourth quarter 2018 remained stable at plus 3 percent for homes under $1 million and plus 2 percent for homes over $1 million. Automobile rates were down slightly and personal articles rates were up slightly, both moving by one-half of one percent.
Kerr pointed out the challenges homeowners in California are enduring by noting: “The brush and wildfire issues in California are similar to the windstorm issues suffered in Florida 12 to 14 years ago. As more California insurers are deemed insolvent, and others begin to restrict their capacity, the market is hardening. We expect to see new entrants into the California market. We also expect to see rate increases from non-admitted insurers of 10 percent to 50 percent in the short term. It’s going to be a rough ride until things settle down a bit.”
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