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Commercial insurance prices continue to increase: MarketScout

Commercial insurance prices continue to increase: MarketScout

The commercial property/casualty insurance market continues to firm, with rates increasing by an average of 4% in May compared with the same month last year, MarketScout reported Tuesday.

The Dallas-based electronic insurance exchange said commercial property insurance and workers compensation saw the biggest increases, at 5% each. No line experienced flat or lower rates, although MarketScout said prices for fiduciary, crime and surety coverage each rose by only 1%.

In addition, MarketScout reported that the smallest accounts experienced the biggest average rate increases at 4% while the largest accounts saw increases of only 1%.

“It's not unusual for underwriters to aggressively price jumbo accounts because of the caches they bring,” said MarketScout CEO Richard Kerr in a statement accompanying the May report. He added that “it is difficult to compare rates with smaller accounts because jumbo accounts frequently implement high retentions, captive involvement and heavy reinsurance.”

Some major insurers value Fortune 100 accounts more than they would a spread of smaller accounts, even if the smaller accounts have significantly lower loss ratios, said Mr. Kerr.

“Economically, it doesn't make sense but a few major commercial insurers are extremely aggressive when pricing jumbo accounts.” He said that as inadequate pricing from prior years comes “home to roost,” jumbo account pricing can be expected to increase.

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