The Council's Q1 2015 P/C Market Survey showed commercial insurance premiums declining across most lines as carrier competition intensified and capacity remained robust. Property and casualty lines broadly softened while commercial auto was the primary outlier with rising rates due to worsening loss experience. The results marked another quarter of favorable conditions for commercial insurance buyers.
NEWS RELEASE – FOR IMMEDIATE RELEASE
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COMMERCIAL P/C PRICING DECLINED IN
FIRST QUARTER OF 2015, ACCORDING TO CIAB SURVEY
WASHINGTON, D.C. – April 21, 2015 – The commercial property/casualty market continued to soften in the first quarter of 2015, according to The Council of Insurance Agents & Brokers’ most recent quarterly Commercial P/C Market Index Survey.
On average, small, medium and large accounts fell 2.3 percent, compared with 0.7 percent in the 4th quarter of last year. Large accounts saw the steepest drop of 3.7%, while medium sized accounts fell 2.7%. Small accounts were relatively flat.
“The trend of falling prices we saw in the fourth quarter of 2014, continued into the first quarter of this year,” said Ken A. Crerar, president/CEO of The Council. “Last quarter, buyers gained some advantage as pricing slid across the board and across all regions for most lines of business. A relatively calm catastrophe season, with the exception of the harsh winter in the Northeast, helped push commercial property pricing down in most of the country. Also, the passage of TRIA reauthorization seemed to settle that market,” Crerar noted.
Plentiful capacity continued to dampen pricing as carriers scrambled to book new business. Most of the brokers responding to the survey reported an actively competitive market. In the Northeast, brokers said carriers were “more aggressive” with a “much broader appetite” and offered “lower deductibles, multi-year deals.” Or as one broker said, carriers were “hungry, hungry, hungry.” Midwestern brokers reported “aggressive carriers” and that “downward pressure on pricing was greater than three months ago.”
Other regions reported similar trends: “Broader risk selection; more flexibility in terms, conditions and pricing” (Southwest); “reduced deductibles higher capacity” (Southeast); and “soft market, lots of property capacity” (Pacific Northwest).
Property pricing fell in most of the country for properties without CAT exposures or losses. However, the Northeast coastal area, which was hit by record-breaking snowfall last winter, did see some tightening and slightly higher deductibles for roof damage caused by ice damning.
Loss experience continued to be a factor in underwriting. While willing to negotiate on pricing, carriers were still looking for good loss histories. As a broker from the Midwest summed it up, “Good accounts being marketed got very competitive pricing. Bad accounts got increases.”
Demand for commercial insurance remained strong with even stronger interest in cyber liability than last quarter. With stories of cyber hacks almost a daily item on the news, business clients of all sizes were taking note of their risks.
The Council’s survey is the oldest source of commercial property-casualty market conditions, pricing practices and trends, dating back to 1999.
