MarketScout’s latest Insurance Market Barometer signals that U.S. commercial property and casualty (P&C) insurance rates remained flat in June, following the trend witnessed in the previous three months of the year.
The fourth month of flat commercial P&C insurance rates in a row shows that this market is still being impacted by the trends in the global reinsurance space, where ample reinsurance capacity and resulting sector pressures ensures players are increasingly looking to commercial property insurance lines.
MarketScout’s Chief Executive Officer (CEO), Richard Kerr said; “We are in the insurance doldrums. There really isn’t even a breeze of significant movement anywhere.”
Commenting on the recent rate movements, or lack of in the U.S. commercial P&C sector, analysts at Keefe, Bruyette & Woods (KBW) stressed, “while rate changes haven’t yet turned negative, flattening rates fall below currently benign loss cost inflation, constraining future margin expansion.”
So far in 2015 rate changes in the U.S. commercial P&C sector have been essentially flat, compared to an average 2.5% rate hike for the same period last year, according to KBW analysts.
Broken down by account size, MarketScout’s monthly barometer reveals that small (up to $25,000) sized accounts reported the most significant positive rate movement, being up 2%.
Large ($250,001 – $1 million) sized accounts were down 1%, while medium ($25,001 – $250,000) sized accounts reported a 1% increase, and Jumbo (Over $1 million) sized accounts reported a 2% rate decline during the period.
So long as pressures in the international reinsurance sector persist, something that is widely expected for the remainder of 2015 across the wider risk transfer markets, the resulting impacts on U.S. commercial P&C insurance rates will remain also.
And, in line with their comments from previous months and echoing views of many re/insurance industry experts, analysts at KBW predict “rates to modestly decline over the next few months.”
To conclude, Kerr added; “The absence of rate movement could be yet another signal that insurers simply are not going to participate in a price slashing war as was done in previous market cycles. Low interest rates and better underwriting tools are making insurers cautious.”