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U.S. commercial insurance pricing was consistently down in 2016, with December closing out the year at a composite rate reduction of 1%, electronic insurance exchange MarketScout said Thursday.
The year began with a composite rate decrease of 4%, moderated slightly beginning in April and continued a steady pattern of monthly rate reductions of 1 to 2%, Dallas-based MarketScout said in a statement.
MarketScout said the soft market is now 16 months old, though it seems longer because the composite rate in 2015 was flat or plus 1 percent for the first eight months before slipping into negative territory.
By coverage classification, commercial property moderated in December from down 3% to down 2%. Workers compensation rates decreased from down 1% to down 2%.
Employment practices liability insurance and crime rates were the only coverages with rate increases, MarketScout said. Both lines of coverage increased by 1% to 2%. The composite rate for all other coverages was unchanged.
By industry classification, MarketScout said contractors adjusted from down 1% to flat. Transportation accounts had ongoing rate increases across the board with an increase to up 5% in December from up 3% in November.
Small accounts, defined by MarketScout as up to $25,000, were flat in December, while medium-size accounts up to $250,000 were down 1%. Large accounts up to $1 million were down 2%, MarketScout said, and jumbo accounts greater than $1 million declined 2% in December.
“Generally, the soft or hard market cycles last at least three years,” MarketScout CEO Richard Kerr said in the statement. “We expect more moderate rate reductions for the coming year for all but a few lines of business. If interest rates increase, rate reductions could accelerate.”
U.K.-based insurance broker JLT Re Ltd. has said that reinsurance prices continued to decline at the Jan. 1 renewals, albeit at a moderating rate, Artemis.bm reported. JLT Re said that "a degree of balance" was restored in global reinsurance markets at 1/1, with evidence of price stability becoming increasingly apparent. "The moderating trend at Jan. 1 is related to today's historically low pricing levels," said David Flandro, global head of analytics at JLT Re.