NEWS RELEASE – FOR IMMEDIATE RELEASE
Contact: Robert Boyce
Director of Market Intelligence & Insights
MARKET CONDITIONS CONTINUE TO HARDEN IN Q3 2019, ACCORDING TO CIAB MARKET SURVEY RESPONDENTS
WASHINGTON, D.C. — November 25, 2019 — The market continued to harden in Q3 2019, according to results from The Council of Insurance Agents & Brokers’ Q3 Commercial Property/Casualty Market Survey. Many respondents agreed the market was transitioning from firm to hard. Premium pricing increased an average of 6.2% across all account sizes in Q3, compared to an increase of 5.2% in Q2 2019. When broken down by account size, responses showed large accounts were hit hardest, with a 7.6% average increase in premiums, compared to a 4.4% average increase for small accounts.
“After several quarters of market firming, we were in a truly unconventional hard market in Q3,” said Ken A. Crerar, President/CEO of The Council. “Commercial Auto’s outsized impact on premium prices and other lines such as Umbrella and D&O continued to push prices up. Social inflation and sustained natural catastrophe losses, including floods and wildfires, also added to the strain on the markets. The question now is how long will it last?”
Notable commercial lines experienced increased premium pricing in Q3 2019, and concerns of rising rates were not just confined to Commercial Auto as in previous quarters. Umbrella saw an average premium increase of 9.8%, while Commercial Auto experienced an increase of 9.1%—only the second time since 2014 that a line of business had a higher premium increase than Commercial Auto. Additionally, Commercial Property saw an average increase of 8.8%, marking the first time since 2001 where rate increases for particular lines of businesses approached double-digit numbers.
From nuclear verdicts to natural catastrophes to distracted driving, the possible reasons for the firming in these lines were many, and premiums were not the only things affected. Respondents reported a relatively significant contraction in underwriting capacity for Commercial Auto, Commercial Property, and Umbrella, with 69%, 74%, and 72% of respondents noting a decrease in capacity for those lines. For example, in the context of Umbrella, “on average, half the [previous] limit was being offered for double the expiring premium, if not more,” according to one respondent.
Carriers also instituted additional requirements when it came time for renewal for Commercial Auto, such as asking for “dash cams and telematics,” and an “analysis of a driver’s MVR and garaging territory.” Commercial Property accounts also sometimes required “mandatory loss control” and “revised SOVs.”
In terms of broker priorities, the market conditions shaped many responses. Respondents described trying to find a niche to specialize in as, “the shotgun approach or one size fits all is much less effective than in the past.” Recruiting just out of college was also a top priority, as employees who are mentored by and trained by a firm through an internship or introductory position were far more likely to stay longer with the firm, according to respondents. As one respondent from a large Midwestern firm said, it’s “important [in this critical moment in the] market to have adequate staff…in order to be efficient and effective brokers.”