Composite P/C Rate Down Consistently In 2016
As the year comes to an end, there are no real surprises in commercial insurance pricing across the United States. The year began with a composite rate decrease of 4 percent. Rates began to moderate slightly beginning in April and continued a steady pattern of monthly rate reductions of 1 to 2 percent. December closed out the year at a composite rate reduction of 1 percent.
The soft market is now sixteen months old. It seems longer because the composite rate in 2015 was flat or plus 1 percent for the first eight months before dipping into negative territory.
Richard Kerr, CEO of MarketScout noted, “We have been tracking commercial property and casualty rates since 2001. Generally, the soft or hard market cycles last at least three years. We expect more moderate rate reductions for the coming year for all but a few lines of business. If interest rates increase, rate reductions could accelerate.”
By coverage classification, commercial property moderated in December from down 3 percent to down 2 percent. Workers' compensation rates decreased from down 1 percent to down 2 percent. EPLI and crime rates were the only coverages with rate increases, both lines of coverage increased by 1 percent to up 2 percent. The composite rate for all other coverages was unchanged.
As measured by account size, there were no changes from November to December 2016.
By industry classification, contractors adjusted from down 1 percent to flat. Transportation accounts had ongoing rate increases across the board with an increase from up 3 percent in November to up 5 percent in December.
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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