The State of the Commercial Property/Casualty Insurance Market

Property/casualty commercial lines rates in the United States have been decreasing moderately for the past three-quarters, according to most industry data. In the most recent Commercial P/C Market Index Survey, rates decreased by 3.3 percent in the second quarter of 2015. Data suggests that rate decreases are most frequently reported in the property, general liability and workers’ compensation lines of coverage. Flood coverage rates are increasing as carriers react to both the Biggert Waters Act and the Homeowner Flood Insurance Affordability Act (HFIAA).

Workers’ compensation prices are decreasing, substantially in some cases, and policy options have resurfaced as insurance carriers struggle to maintain market share and achieve growth targets.

We are also experiencing a normal rotation of business from not admitted/surplus lines carriers back to admitted markets. This is most prevalent in the professional liability market. Standard market carriers are interested in higher risk exposures, and underwriting standards have loosened significantly.

Industry experts predict that the current decreasing rate environment could be prolonged as the property/casualty insurance market remains well capitalized.

Sterling Insurance is proactively managing the industry cycle by working diligently to maintain a positive relationship between our clients and the incumbent carriers. This is especially important when the quality of the claims management and risk control services provided by the carrier is meeting the expectations of our clients, our claims managers and our risk control specialists.
One of the most important factors in securing better-than-average terms, conditions and pricing is to be a profitable client from the carrier’s perspective. We prepare and perform a detailed loss ratio analysis and claim review in preparation for insurance program design negotiations with our carriers. We aggressively pursue an incumbent carrier’s renewal position as early as possible so we have time to pursue alternatives, if needed. Whenever appropriate, we suggest that our client meets with the carrier’s decision-makers to provide an overview of the business and strengthen the relationship.

If necessary, we access a broad range of carries to obtain competitive coverage and pricing terms and conditions. We are also industry experts on the alternative market.

In a soft market, it is important that we work with our clients to assess the organizational strengths, weaknesses and opportunities for improvement. We prepare a persuasive underwriting case for the marketplace, doing the utmost to facilitate the underwriter’s quantitative analysis. We provide documentation of our client’s risk management programs and highlight past, present or future actions plans relating to the company’s efforts to improve its risk profile. We continue to search for innovative ways to achieve excellent results in the market for our clients in every cycle of our industry.