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The COVID-19 Pandemic: Opportunities and Implications for Captive Insurance

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Year-End 2019 Commercial Lines Premium Renewal Rates Tick Up

Upward Swing
January 16, 2020

IVANS announced the IVANS Index: Premium Renewal Rate Index Q4 and year-end 2019 results. Year-over-year, all lines of business except workers compensation experienced an increase in average premium renewal rate. Q4 results showed an increased premium renewal rate change average across commercial auto, businessowners policy (BOP), general liability, umbrella, and commercial property compared to Q3; however, workers compensation average premium renewal rate change dropped and remained in negative territory, which it had consistently been in throughout all of 2019. Notably, commercial auto, BOP, and commercial property all ended the year with their highest average premium renewal rate change.

The premium renewal rate change highlights by the line of business for Q4 and year-end 2019 include the following.

  • Commercial auto—4.52 percent average for the quarter, with a quarter high in December at 5.12 percent and low in November at 4.12 percent. The year high and low premium renewal rate change was 5.12 percent and 4.03 percent in December and July, respectively.
  • Businessowners policy—4.57 percent average for the quarter, representing an increase over last quarter's average of 4.17 percent. BOP premium renewal rate change finished the quarter at 4.75 percent in December. The year high and low premium renewal rate change occurred in December and February at 4.75 percent and 3.94 percent, respectively.
  • General liability—2.60 percent average in Q4, up from 2.51 percent in Q3. The quarter premium renewal rate change reached its low of 2.49 percent at the start of the quarter in October. General liability average premium renewal rate change was lowest in Q1 for 2019, reaching a year low in January at 1.16 percent, and hit a high in December at 2.78 percent.
  • Commercial property—4.46 percent average in Q4, up from 4.20 percent in Q3. Commercial property premium renewal rate change reached its high for 2019 in Q4 at 4.65 percent in December. The 2019 year high premium renewal rate change was in December (4.65 percent), and the low was in April at 3.69 percent.
  • Umbrella—2.61 percent average in Q4 versus 2.66 percent in Q3. Umbrella premium renewal rate change reached its quarter high in December at 2.71 percent. The year low and high premium renewal rate change occurred in January and February at 2.17 percent and 3.06 percent, respectively.
  • Workers compensation— -2.84 percent average for the quarter, up from -2.92 percent in Q3. January marked the lowest premium renewal rate change of the year at -1.04 percent for workers compensation, with March experiencing the most significant average premium renewal rate change at -4.43 percent.

"We saw a trend of most premium renewal rate changes hitting year-end highs in December and a trend of most commercial lines increasing in Q4 with the exception of Umbrella," said Brian Wood, vice president of Data Products Group, IVANS Insurance Services.

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 the 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.

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