Composite insurance rates dropped again in July–by 7 percent–though a few lines showed upward trends, according to a monthly report from an online insurance exchange.
The lowering price trend was detailed by Dallas-based MarketScout in its monthly market pricing barometer.
Over the past three months the company noted rates have fallen 5, 6 and 7 percent consecutively.
While the majority of individual lines were down anywhere from 1 to 8 percent, directors and officers liability and fiduciary were flat. Commercial property was up 2 percent, and business income and crime were up 1 percent, according to MarketScout.
By industry class, manufacturing, contracting and service sectors were down 5 to 8 percent, while habitation, public entity and transportation markets were up 1 to 5 percent. Energy showed the highest increase at 8 percent.
The company said its analysis, based upon pricing through its online transactions, is a composite index and individual risks vary based upon underwriting criteria, risk profile, industry group and geographic location.
Richard Kerr, chairman and chief executive officer of MarketScout, commenting on the results, said, “Underwriters are getting smarter because they have better information tools to analyze risks.
“As technology has evolved, insurance and reinsurance companies are utilizing improved techniques to more appropriately price each account. Improved catastrophe modeling provides more accurate data, enabling underwriters to price each risk based upon its own unique characteristics.”
He said technology is allowing insurers to create “micromarkets” where rates vary significantly based upon geographic location, profile and industry class of each risk.
While insurers have always assessed higher rates for catastrophe-prone areas, technology has developed new rating methodologies, which give insurers a better feel for what types of accounts suffer more severe losses, said Mr. Kerr.
He also noted that insurers are using mapping software that allows them to track wind-exposed risks and keeps them from becoming overweight in any one catastrophe-prone area.
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