Workers Comp Rates Up for Second Quarter of 2013 – Brokers Seeing Price Increases of 10-20%

Business Insurance

July 24, 2013

Commercial property/casualty pricing ticked upward in the second quarter of 2013, but at a slower rate than the beginning of the year, the Council of Insurance Agents & Brokers said.

Property/casualty pricing for U.S.-based accounts rose at an average rate of 4.3% from April 1 to June 30, down from the 5.2% growth rate in the first three months of 2013, the Washington-based council said in its quarterly Commercial P/C Market Index Survey, released on Tuesday.

Aggregate commercial price increases were most robust among mid-market accounts for the second straight quarter. Medium-size accounts saw pricing rise 4.7% in the second quarter, compared with a 4.6% increase for small accounts and 3.8% for large accounts, according to the council's survey of insurance brokers.

“There weren't any great surprises in the second quarter,” Council President and CEO Ken A. Crerar said in a statement. “Prices inched up, underwriting tightened and insurers looked to reduce exposure in some critical areas. However, the market hardening appears to have moderated in the last quarter.”

Nationwide, 72% of brokers surveyed said commercial property pricing for midsize accounts increased as much as 10% in the second quarter, while nearly 25% of brokers said large accounts saw no change in pricing in the same period.

Workers comp, liability hikes

Brokers said ongoing firming in the property market was due in large part to lingering effects from Superstorm Sandy, the council said.

Workers compensation, executive liability and employment practices liability witnessed the most aggressive rate firming among casualty insurance lines in the second quarter, the council report said.

Twenty-five percent of brokers surveyed said they had encountered price increases of 10% to 20% for workers compensation, while 22% and 21% of brokers said they'd seen similar increases in directors and officers and employment practices liability lines.

Conversely, the council's study found that only one insurance line — medical malpractice — experienced price softening of more than 10% during the quarter, and only 2% of brokers reported experiencing such decreases.

If you are a broker who writes workers comp premiums of $100,000 and above, you know that a 10% to 20% increase in your clients' workers comp premiums is VERY significant. Employers who see such big increases in their workers comp insurance are prone to shop around for the cheapest policy. Workers compensation premium recovery is the quickest and easiest way to help your clients obtain workers compensation refunds and help them have a better underwriting profile for the renewal marketplace. Keep your existing clients happy, increase your book of business, and add a new revenue stream.