“This marked the seventh consecutive quarter of increased premium pricing,” said Ken A. Crerar, President/CEO of The Council. “Additionally, the rate of increase has grown consistently quarter-over-quarter, confirming the growing consensus of market-wide firming. While this trend was specific to a number of lines in late 2017, including Commercial Auto, Commercial Property and Umbrella, every line The Council monitors, with the exception of Workers’ Compensation, experienced an increase in premium pricing in Q2 2019.”
Natural catastrophes, from the historic wildfire season that crippled California in 2018 to the ongoing flooding in the Midwest and the Southeast, continued to impact Commercial Property rates. Results showed an 8.5% for Commercial Property, the highest increase across all commercial lines, including Commercial Auto. Respondents noted that carriers continued to pull back from areas significantly impacted by catastrophes; nearly 60% of respondents reported a decrease in capacity for Commercial Property, and many noted that carriers were removing extensions for Flood or Earthquake risks, even if the property was not in a high-risk flood or earthquake zone.
Commercial Auto was also a major concern in Q2 2019, and continued to affect other lines, particularly Umbrella, which saw reduced limits and higher deductibles when there were underlying Auto policies. As in previous quarters, carriers did attempt to mitigate the issues with Commercial Property, Commercial Auto, and Umbrella by taking reductions in Workers’ Compensation, as well as offering more risk control efforts to their clients.
Brokers also highlighted that a firming market would offer brokerages a chance to differentiate themselves from their competition by offering excellent client service and being able to devise solutions for hard-to-place risk. Specialization was also an important theme in Q2 2019, especially when it came to improving profit margins and assuring a sustainable future for a firm. With an uncertain future ahead for many, it’s more important than ever for brokers to be the trusted advisor their clients need.