Commercial P/C Rates Up One Percent in October
MarketScout reports that commercial property and casualty insurance rates
increased 1 percent in October, and commercial auto insurance had the
largest increase of 3 percent. Among all industry classes, contractors
experienced the largest increase of 3 percent on average. Smaller accounts
experienced larger increases, averaging 2 percent, while large accounts saw
relatively flat pricing. As has generally been the case in recent years, the
smaller the account, the larger the rate of increase, with the smallest
accounts reporting two percent rate increases while the largest remained flat.
"As expected, the U.S. composite commercial rate continues its slow slide,"
said MarketScout CEO Richard Kerr in a statement. "We are almost completely
past hurricane season, so we expect continued pressure on property rates.
Workers' compensation rates are also down from last month; however, a few
large insurers could be facing some challenges on their comp book. If so,
this could moderate the slide in W/C premiums."
What It Means to Agents:
These are October numbers only and are an overall,
countrywide averaging. Individual agency experiences will differ. However,
in looking at the different data points as a whole, a continuing trend is
the cost-effect that the "contractor classes" have across the C/L auto, W/C
and small-to-mid-sized accounts areas. It is also too soon to detect what
rating adjustments insurers may need to make in response to continuing
cyber-related events, which are expected to impact across multiple
FACI Discusses Cyber, Auto
On November 6, 2014, the Federal Advisory Committee on Insurance (FACI),
an advisory body to the Federal Insurance Office (FIO), met in Washington,
D.C. The committee heard from the National Institute of Standards and
Technology (NIST) on the current status of a cybersecurity framework being
developed pursuant to a 2013 Presidential Order. NIST is working with
multiple stakeholders globally, including the insurance industry, to
develop the framework. Zurich N.A. also presented to the committee on the
underwriting challenges for insurers who provide cyber insurance, such as
difficulties in understanding the full scope of exposure and the lack of
The Consumer Federation of America (CFA)
told the committee that there
are serious concerns whether auto insurance is affordable for low and moderate
income Americans. The CFA urged the FIO to more aggressively collect data
to monitor affordability. In April 2014, the FIO released a request for
comment relating to its authority to monitor the affordability of auto
insurance. Birny Birnbaum, the Chair of FACI's subcommittee on auto insurance
affordability, supported CFA's request.
The FIO, the Federal Reserve and state insurance commissioners
working collectively on a U.S. capital standards proposal to address the unique
needs of the U.S. insurance market in forthcoming international capital
standards. FIO Director Michael McRaith stated that any international
standards must be capable of being implemented without disrupting the
U.S. market. FACI is also creating a subcommittee to examine domestic
prudential issues and look at where there may be gaps in state insurance
regulation. The subcommittee will be chaired by Ted Mathas of New York Life.
Questions regarding FACI can be directed to Jennifer Webb, PIA National
Counsel & Director of Regulatory Affairs at
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