FOR IMMEDIATE RELEASE
Commercial P&C Pricing Lowered Slightly in Fourth Quarter of 2014, According to CIAB Survey
WASHINGTON, D.C. – Premium pricing for the commercial property and casualty market was slightly lower in the fourth quarter of 2014, according to The Council of Insurance Agents & Brokers’ quarterly Commercial P&C Market Index Survey.
On average, large, medium and small accounts declined by a meager 0.7 percent, compared with a small increase of 0.1 percent in the third quarter of 2014. Large accounts experienced the largest pricing drop of -2.2 percent. Medium accounts dropped -0.9 percent, while small accounts rose 1.1 percent in the last quarter as the Barclays Research chart below shows.
“Changes weren’t particularly dramatic last quarter and capacity remained ample for good accounts and new business — very similar to what we saw in the previous quarter,” said Ken A. Crerar, president/CEO of The Council. “Congress’ dithering over TRIA reauthorization caused some unease in that market, but the passage of the TRIA extension should settle those concerns,” Crerar said.
Most of the brokers surveyed reported no significant changes in the market, however, results varied somewhat by line, region and loss experience. If anything, there was a trend towards market softening in the fourth quarter.
Competition clearly was a factor in keeping rates down. Brokers in the Northeast reported “fierce competition.” One noted that there was a “feeding frenzy at the end of the year to write new premium.” A similar story played out in the Southeast. “Overall, pricing being pushed lower, especially as competition has been introduced.” In the Midwest, “Terms are easier to negotiate, price continues to be driven by competition,” another broker said.
As in past quarters, carriers were more aggressive on new business, while trying to hold the line on renewals with good loss experience. In the Northeast, “Carriers seem to be holding to strict underwriting guidelines on one hand, but on the other they want to write business. There is more flexibility on larger accounts.” Carriers were also looking for renewals with a good loss history. A Midwest broker said, “Generally more aggressive on new business and renewals with a clean loss history.”
Wind and hail losses continued to be a problem for some regions of the country. In the Pacific Northwest, brokers have seen “increased scrutiny on property risks given recent hail activity. Many carriers are pushing separate/higher wind/hail deductibles, while maintaining relatively flat rates.” In the Southwest carriers tightened property underwriting and increased the use of wind and hail deductibles.
Demand for commercial insurance generally was up in the fourth quarter, according to 90 percent of those surveyed – a stark contrast to the dramatic drop in demand during the 2007 recession. In particular, brokers saw an up-tick in interest in cyber risk coverage, no doubt piqued by recent high-profile hacking attacks, such as the one against Sony by North Korea.
The Council’s survey is the oldest source of commercial property-casualty market conditions, pricing practices and trends, dating back to 1999.
P&C Market Survey Contact:
Zach West
Senior Content Specialist/Copy Chief, Leader’s Edge
