COLORADO SPRINGS, Colo. — Commercial insurance rates are increasing and likely will continue to increase, but it's still not a hard market, a panel of insurance executives said.
While overall property/casualty rates are higher on average, there are some pockets where rates are increasing dramatically and there are other areas where rate increases are negligible, panelists said Sunday during a session of the Council of Insurance Agents and Brokers' Insurance Leadership Forum in Colorado Springs, Colo.
With plentiful capacity still available, it's unclear what the rating environment for 2013 will be, they said.
This year has been a better year for insurers than last year from several different perspectives, said Charles Dangelo, president and CEO of Starr Indemnity & Liability Co. in New York.
The level of catastrophes is down significantly, and rates have improved, he said. However, the rate increases still vary significantly by industry and region.
For example, “There's still some good competition going on for some (directors and officers), financial liability lines of business for good, strong companies that have strong management in place, but try and place some general liability insurance for a contractor in New York City. It's a hard market down there; it's very, very tough,” Mr. Dangelo said.
With investment income low, insurers are putting a greater emphasis on underwriting individual risks, and rate increases are ranging from low single digits to more than 25%, he said.
“We are seeing very strong rate changes in energy property and energy casualty. And that's not surprising, as energy property and energy casualty had a lot of losses in 2010 and 2011 … In other areas, the experience has been very good, and the rate changes have been quite tempered in those lines of business,” Mr. Dangelo said.
Rates are increasing in some areas for U.S. risks, but it's important to remember that, when measured by combined ratios, the U.S. market is the worst-performing market compared with the insurance markets in the other major developed economies, said John Rumpler, New York-based president and CEO of North American operations for QBE Insurance Group Ltd.
“Is it a hard market? It is in some lines of business, in some segments, in some geographies. It's spotty. It's variable. It's at least positive. Intellectually, it ought to continue for some time, but not everything and everybody behaves intellectually,” Mr. Rumpler said.
Rate increases are variable, agreed Lori Dickerson Fouché, president and CEO of Fireman's Fund Insurance Co. in Novato, Calif.
Looking forward to 2013, rates should continue to increase given that loss cost trends are increasing steadily at 3% to 5% a year, depending on the line of business, she said.
But the plentiful capacity available in the insurance sector may halt significant price increases in some sectors, Ms. Fouché said.
“When you look at just the surplus that's left in the industry right now, the surplus and the economic conditions act as a cap to seeing the kind of hard markets that we've seen in the past,” she said.