US rates continue downward trend in Q2 2017

Insurance buyers with interests in the US will be happy to hear of the 10th consecutive quarter of commercial property and casualty rate declines, with an average fall of 2.8% recorded by the Council of Insurance & Brokers (CIAB) in the second quarter of 2017. Rates for large commercial P&C accounts reported higher than average declines of 4.3% and the cyber insurance market was found to be “softer than ever”. Rate declines in the commercial US P&C market gathered pace slightly in the second quarter after the 2.5% fall recorded in the first quarter of 2017, but reductions have stabilised so far this year after average falls of 3.9% recorded over 2016. The CIAB said that the prolonged soft market has seen insurers keen to broaden and improve terms and conditions, especially as the pace of rate decline appears to have flattened out in 2017 to date. The largest rate decreases in Q2 were recorded in commercial property, down 3.6%, while the decline in rates for both workers’ compensation and general liability fell by 2.7%. The CIAB said respondents to its commercial P&C survey described the market as competitive with plenty of capacity, despite falling prices recorded over the past 10 quarters. The survey found that workers’ compensation capacity continued to increase above other lines, explained in part by the profitable experience of some carriers offering cover. “Respondents agreed that the market continues to soften and carriers are pressed with either lowering rates or broadening terms. Pressure to retain clients and aggressive underwriting are also trends we have seen in 2017. As competition in the commercial P/C market increases, respondents noted that capacity is increasing simultaneously,” the survey said. Continuing its position of defying the general soft market trend first established in 2011, commercial motor insurance was the only line to report a premium increase during the second quarter of 2017. It recorded premium increases of 6.1% with some survey respondents reporting increases on their commercial motor books as high as 15%. “While premium pricing in commercial auto continued to go against market trends, most other lines remain soft but appeared to be flattening to some extent,” said Ken Crerar, president & CEO of the CIAB. “In response to a soft and competitive market, we also saw carriers opt towards improving terms and conditions over dropping premium rates,” he added. Survey respondents told the CIAB that poor loss ratios in commercial motor have tightened underwriting and pushed up premiums, with some examples of carriers turning down renewals for accounts with poor loss history. Despite recent high profile global cyber attacks, the CIAB survey found little impact on the cost of cyber insurance, with the average rate down 1.4% during the second quarter of this year and “softer than ever”. The CIAB said the soft cyber market and high levels of capacity has started to see an increase in demand for cyber coverage from businesses of all sizes. The CIAB said lack of standardisation continues to be a problem. “Insufficient actuarial data combined with the risk of an aggregate attack make large-scale underwriting extremely risky, as an attack on a cloud service provider could cripple the industry,” the CIAB said.

US rates continue downward trend in Q2 2017

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