US commercial property rates record first decrease in 27 quarters

US commercial property insurance rates entered negative territory for the first time in 27 quarters, with a second-quarter average rate decrease of 0.94% as capacity increased and pricing eased, according to a report from Aon.

But rates varied, with desirable occupancy classes and natural catastrophe-exposed accounts excluding Florida seeing rate decreases of up to 10% in the quarter, while rate increases were up to 10% or higher for Florida-only or natural catastrophe-exposed Florida accounts, Aon said in its latest pricing report.

Broad market conditions continue to moderate, especially for natural-catastrophe-exposed businesses, and rate dynamics are expected to continue in the third quarter, Aon said.

Policyholders with shared and layered programs saw rates decrease 3.18% on average for the quarter ended 30 June, compared with a 0.05% decrease in the first quarter.

Single insurer rates increased 3.1% on average, down from 6.68% in the first quarter.

“Capacity is helping to moderate pricing,” Vincent Flood, US property practice leader for Aon, said in a statement.

“Clients can expect an aggressive underwriting approach for shared and layered accounts with desirable occupancy classes and profitable historic loss ratios, with or without heavy nat-cat exposures,” Flood said.

Loss-challenged or less desirable occupancies saw flat to 5% rate increases in the quarter.

The average second-quarter rate decrease of 0.94% compared with a 3.4% rate increase in the first quarter. Rates were last in negative territory in the third quarter of 2017.

This article first appeared on our sister website Business Insurance. For further news from Business Insurance, please click here.