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IVANS: Second Quarter Renewal Rates Show Continued Market Hardening

Money graph
July 16, 2019

IVANS has announced the IVANS Index: Premium Renewal Rate Index second quarter 2019 results. Month over month, commercial auto, businessowners policy, general liability, umbrella, and commercial property all experienced increases in average premium renewal rate change; workers compensation remains in negative territory. Quarter over quarter, there was greater variability in average premium renewal rate change. General liability and commercial property all experienced increases compared to first quarter; however, commercial auto, umbrella, and workers compensation average premium renewal rate change dropped relative to the quarter prior. Businessowners policy remained flat, quarter over quarter.

Premium renewal rate change by line of business for second quarter 2019 highlights include the following. 

  • Commercial Auto: Premium renewal rate change averaged 4.33 percent for the quarter, with a quarter high in June at 4.39 percent.
  • Businessowners Policy: Quarter premium renewal rate change averaged 4.19 percent and finished the quarter at 4.18 percent in June.
  • General Liability: Q2 premium renewal rate change increased from Q1, averaging 2.29 percent change relative to 1.67 percent in Q1. The quarter premium renewal rate change reached its low of 2.18 percent in April.
  • Commercial Property: Q2 premium renewal rate change increased to 3.92 percent, reaching a quarter high in June at 4.25 percent.
  • Umbrella: Q2 premium renewal rate change averaged 2.59 percent versus 2.54 percent in Q1. Umbrella premium renewal rate change for the quarter reached its high in June at 2.66 percent.
  • Workers Compensation: Average premium renewal rate change for the quarter reached -3.56 percent, down from Q1 average of -2.95 percent.

 "From Q2 2018 to Q2 2019, we see the trend of most commercial lines increasing, with the exception of workers compensation," said Brian Wood, vice president of Data Products Group, IVANS Insurance Services. "These data-driven insights are indicating that premium pricing in the market continues to harden, providing opportunity for greater profitability across certain lines of commercial business."

IVANS Index, released monthly, is a data-driven report on conditions and trends for premium rate renewal change of the most-placed commercial lines of business in the insurance industry. Based on analysis of more than 120 million data transactions, the IVANS Index premium renewal rate change measures the premium difference year over year for a single consistent policy. It includes more than 32,000 agencies and 400 insurers and managing general agents, and it reflects premium rate change trends experienced by all agencies and insurers across the US insurance market. IVANS Index is available to agencies and insurers as part of IVANS's "Market Insights."

To derive the change in cost, IVANS uses policies that have the same insured, insurer, product type, policy number, expiration date, effective date, and producing agency. For example, if an insured paid $1,000 for a policy last year and $1,023 this year, IVANS Index would state that there is a premium renewal rate change of 2.3 percent. IVANS Index does not use exposure base change or claims experience. Policies with anomalous exposure changes or claims experience are removed.

The complete IVANS Index report is available on the IVANS website.

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