The composite rate for commercial insurance in the second quarter of 2021 increased 5.9 percent compared to 7.0 percent in the first quarter, according to MarketScout’s recently released Market Barometer. There were adjustments in commercial lines rates as measured by industry group, coverage classification and account size.
Property, auto, business interruption, general liability, EPLI, crime and public entity had rate increases from quarter one to quarter two, but overall the composite rate index was down.
“We monitor trends. This quarter there was a slight trend towards rate moderation, but this could be an aberration. Let’s see how the rest of the year plays out before we make any predictions about market rates moderating,” said Richard Kerr, CEO of MarketScout.
“We are now entering hurricane season and this fall we will be in wildfire season. Property rates continue to rise and could get even higher,” Kerr noted.
By coverage class, the increases varied from 1.0 percent for workers’ compensation to 11.6 percent for umbrella/excess. In between, surety was up 1.3 percent; fiduciary was up 2.0 percent; crime was up 3.0 percent; BOP was up 4.0 percent; inland marine was up 4.2 percent; professional liability was up 4.3 percent, compared to 11.3 percent last quarter; general liability was up 6.3 percent; business interruption and EPLI were up 7.0 percent; commercial auto was up 9.0 percent; commercial property 9.6 percent; D&O liability was up 11.0 percent;
Small accounts (up to $25,000 in premium) were up 5.3 percent, compared to 6.3 percent in the first quarter; medium accounts ($25,001 to $250,000) were up 6.3 percent; large accounts ($250,001 to $1 million) were up 8.3 percent, and jumbo accounts (more than $1 million) were up 6.6 percent.
By industry class, service was up 4.3 percent; public entities and manufacturing were up 5.6 percent; contracting and energy were up 6.3 percent; habitational was up 8.6 percent, and transportation was up 11.0 percent.
The personal lines composite rate increase is down slightly from quarter one to quarter two.
“Personal lines buyers are being assessed a second quarter rate increase of 4.75 percent as compared to 5.6 percent in the first quarter of 2021,” Kerr said. “However, we are just entering the hurricane and wildfire seasons over the next five or six months so rates could change quickly. An increasing number of homeowners are using non-admitted insurers. When non-admitted insurers are hit with significant losses, they can adjust rates very quickly.”
Homes valued at under $1 million in value were up 4.6 percent, while homes valued over $1 million were up 5.6 percent. At the same time, personal automobile insurance rates and personal articles rates were up 4.0 percent.