Commercial P&C pricing increases slow in Q2 2013

Commercial property and casualty pricing in the United States continued to rise in 2013 Q2, although at a slower rate than in the previous quarter, note results from the quarterly Commercial P/C Market Index Survey, released July 23 by the Council of Insurance Agents & Brokers (CIAB).

On average, pricing rose at a rate of 4.3% in the second quarter of 2013 compared with 5.2% in the first quarter of the year, indicate charts prepared by Barclays Research and based on council data. The critical areas continued to be property and workers’ compensation, notes a statement from CIAB.

Overall, CIAB reports that small and medium account pricing continued to rise more than pricing for large accounts. More specifically in 2013 Q2, small accounts pricing rose 4.6%, medium increased 4.7% and large was up 3.8%. This compares to increases of 5.2%, 5.3% and 4.9% in the first quarter of 2013.

“Prices inched up, underwriting tightened and insurers looked to reduce exposure in some critical areas,” CIAB president and CEO Ken Crerar notes in the statement. “However, the market hardening appears to have moderated in the last quarter,” Crerar adds.

The sting of Superstorm Sandy is still being felt. CIAB notes that insurers were looking carefully at any cat-prone property exposure on the coast or inland. Brokers across the U.S. who responded to the survey reported that insurers were using more wind/hail deductibles. As well, brokers noted carriers pulled back on terms and conditions and lowered limits and cover for exposures, such as storm surge, flood and off-site power, among others.

CIAB cites one broker in the Midwest as saying flood mapping by carriers was fraught with uncertainty and inconsistency, suggesting that there should be a universally recognized and uniform flood-mapping model.

The council’s survey – a source of existing market conditions, pricing practices and trends – dates back to 1999.