Commercial p&c pricing in U.S. continues gradual decline in 2015 Q2

The gradual downward trend in rates for commercial property and casualty insurance across all lines in the United States continued in the second quarter of 2015, with decreases consistent with what was seen at the end of 2014 and 2015 Q1, reports the Council of Insurance Agents & Brokers (CIAB).

CIAB’s latest quarterly Commercial P/C Market Index Survey shows an average 3.3% premium rate decreases across all size accounts. Large accounts once again saw the steepest drop of 5.2%, while medium sized accounts fell 3.5%, and small accounts fell 1.3%, notes a statement from CIAB. [click image below to enlarge]

“As the soft market continues in 2015, carriers are competing for good risks and are willing to work with brokers on price and terms,” council president and CEO Ken A. Crerar says in the statement.

Commercial property, general liability, and workers’ compensation premiums were most frequently reported down across all regions, with a slight uptick in commercial auto, the survey shows.

There was also an uptick in average flood insurance rates across all regions. This was most frequently reported in the Southeast and Southwest regions, CIAB points out, likely the result of premium increases, assessments and surcharges, mandated by new legislation. Almost 90% of respondents reported that take-up rates had increased in the second quarter of 2015, the council statement adds.

Also getting more traction, respondents report, is cyber liability. Continuing what was seen in 2015 Q1, CIAB notes “this trend is expected to continue as the cyber insurance market matures, new insurers, products and capacity come to market, and the true extent of companies’ cyber exposure is realized.”

Respondents and Crerar also point to consolidation in both the carrier and broker sectors. “The number and magnitude of recent industry mergers are bound to lead to questions about whether we are entering another echelon of M&A activity where faster and more pervasive consolidation is likely,” he says.

Noting that the tab for M&A in the U.S. for the first half of 2015 “is the highest ever for any nation as companies take advantage of historic low interest rates and record cash piles to invest in future growth,” Crerar says.

Still, he adds, “active M&A has always been a constant in the insurance industry and carriers and brokers have shown time and time again that they are adaptive, creative, and resilient during such changes in the competitive landscape.”