IVANS: Commercial Lines Renewal Rates Increased Last Quarter
February 01, 2019
The IVANS Index: Premium Renewal Rate Index year-end 2018 results for the fourth quarter showed an increase in the premium renewal rate change average across nearly all major commercial lines compared to the third quarter; however, the workers compensation average premium renewal rate change dropped and remained in negative territory, which was consistent with the 2018 annual results. Notably, commercial auto, general liability, commercial property, and umbrella all experienced the greatest premium renewal rate change from the year prior in the fourth quarter.
The premium renewal rate change by line of business for the fourth quarter and 2018 highlights include the following.
- Commercial auto: The premium renewal rate change averaged 4.66 percent for the quarter, with a quarter high in October at 4.81 percent and ending the quarter at its low of 4.51 percent in December. The 2018 average premium renewal rate change for commercial auto was higher compared to 2017 throughout the entire year, peaking in September with an average premium renewal rate change at 4.50 percent in 2018 versus 2.55 percent in 2017.
- Businessowners policy (BOP): The quarter premium renewal rate change averaged 4.23 percent, representing an increase over last quarter's average of 4.15 percent. The BOP premium renewal rate change finished the quarter at 4.23 percent in December. Relative to other lines of business, BOP's average premium renewal rate experienced the most variability between 2018 and 2017.
- General liability: The fourth quarter premium renewal rate change increased from the third quarter, averaging 2.54 percent change relative to 2.35 percent. The quarter premium renewal rate change reached its low of 2.23 percent at the quarter's end in December. General liability started out 2018 in January and February with a lower average premium renewal rate than 2017, averaging 0.44 percent higher from March through the remainder of 2018 across the same period of time the year prior.
- Commercial property: The fourth quarter premium renewal rate change rose again quarter over quarter, with an average rate change of 3.74 percent as compared to 3.34 percent in the third quarter. The commercial property premium renewal rate change reached its high for 2018 in the fourth quarter at 3.95 percent in December. The 2018 average premium renewal rate change for commercial property was higher compared to 2017, with the exception of June at 3.24 percent in 2018 versus 3.52 percent in 2017.
- Umbrella: The fourth quarter premium renewal rate change averaged 2.42 percent versus 1.93 percent in the third quarter. The umbrella premium renewal rate change reached its high for 2018 in the fourth quarter at 2.76 percent in November. The 2018 average premium renewal rate change for umbrella was higher compared to 2017, averaging .70 percent higher year over year.
- Workers compensation: The average premium renewal rate change for the quarter reached 3.04 percent, down from the third quarter average of -2.76 percent. The 2018 average premium renewal rate change for workers compensation was consistently more negative compared to 2017, with the exception of December, which ended at -2.66 percent in 2018 versus -2.92 percent in 2017.
"The end of 2018 experienced the greatest change in premium renewal rates from the year prior for nearly all major commercial lines products," said Brian Wood, vice president of Data Products Group, IVANS Insurance.
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 30,000 agencies and 380 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.
February 01, 2019