In March, MarketScout’s Market Barometer showed that rate increases picked up steam ever so slightly to plus-3%, but in April, a multitude of factors caused rates to moderate again to plus-2%.

MarketScout CEO Richard Kerr says, “The April composite commercial rate remained in positive territory at plus-2%, but we may see rate reductions by year end if the current trend continues. If you are in the market on a daily basis, you can almost feel a change in the wind. No reasonable insurer wants rate reductions. However, everyone seems to feel they are coming.”

MarketScout says insurers are finding reasons to fight over business, such the impact of reinsurance pricing and the competition there from catastrophe bonds and insurance-linked securities. 

Some lines, Kerr says, may be on hold for the moment. “Catastrophic property rates will probably hold steady in the next four months because we are on the cusp of hurricane season,” he notes, adding that if the “wind doesn’t blow, get ready for a solid round of rate reductions at year-end.”

Workers’ compensation, Kerr says, remains a tough class, with several major carriers exiting the market recently and others cutting back their business in this line. “We expect workers’ compensation insurers to hold steady with small rate increases continuing,” he says.

EPLI, workers’ comp and commercial auto led the way for April rate increases at 3%. No line showed rate decreases, but business interruption, inland marine, fiduciary, crime and surety were all up by just 1%. 

In March, small, medium and large accounts were all up by 3% while jumbo accounts increased by 1%. In April, only small accounts remained at plus-3%. Medium accounts were up by 2% and large and jumbo accounts were both up by 1%.


Personal lines

Meanwhile, personal-lines rates held steady at 3% in April. Homeowners rates—for homes valued both over and under $1 million—and auto rates were unchanged in March at plus-3%, while personal articles rates were unchanged at plus-2%.

Kerr says, “Spread of risk is extremely important for personal lines insurers. Those that are heavily burdened with catastrophe-exposed business are taking a big chance. We are noting insurers are actually requiring a balanced book if agents want to access their cat capacity. This is good news for those agents with widespread operations because they can offer an insurer business in the central US to balance their cat-exposed book. Those who are, for instance, only in Florida, will find themselves getting paid less commission and having access to less capacity.”