Recently, Property Casualty 360 had an article on why commercial insurance rates are dropping. According to the article (found here), commercial insurance rates are dropping dramatically and will continue to do so in 2015. We sat down with McGowan Program Administrator’s Tim Lee to ask him 4 quick questions on these predictions and how it will affect MPA and the market as a whole.
Q: How are these decreasing rates affecting McGowan Program Administrators, if at all?
TL: You can’t take renewal accounts for granted because there is a competitor asking for the business.
Q: How do you think decreasing rates affects the market as a whole?
TL: It diminishes loyalty between the insured and the agent, and the agent and the carrier, because insureds will move their business over a few dollars.
Q: What do you predict commercial insurance rates will do in the future?
TL: I think the numbers listed in the article are on target.
Q: Is there anything companies can do to keep these future predictions from hurting them?
TL: Carriers have to stay focused on the core products and adhere to their underwriting principles. A carrier entering into classes of business without strong underwriting and claims people will have a huge problem in the next 2-4 years.
According to the article, here are the key rate predictions from Willis for 2015:
| PROPERTY | |
| Non-CAT Risks: | -10% to -15% |
| CAT-Exposed Risks: | -10% to -15% |
| CASUALTY | |
| General Liability: | -10 to +10% |
| Umbrella/Excess: | -10% to +5% |
| Workers’ Comp: | -5% to +5%; up to +8% in CA |
| Auto: | -10% to +10% |
| EXECUTIVE RISKS | |
| Directors & Officers: | -5% to +5% |
| Errors & Omissions: | Flat to -5% or more for programs with good loss experience; +5 to +20% for programs with poor loss experience |
| Employment Practices Liability: | Flat to +5% |
| Fiduciary: | Flat to +5% |
| CYBER | |
| -2% to +5%; Flat to 20% for POS retailers; more competitive for first-time buyers | |
| AVIATION | |
| Airlines: | +20% to +30% |
| Aerospace: | Flat to +10% |
| BENEFITS | |
| Self-Insured plans: | +5% to +6% |
| Insured plans: | +9.5% to +10.5% |
