Profitability trumps growth, right? Indeed, after declining for six straight years, average property and casualty rates have been on the rise since late 2011, according to MarketScout Corporation's research. The traditional approach to increasing loss costs and improving market conditions is for P&C carriers to raise rates across their book of business—even if that makes them less competitive.

But what if carriers could be more sophisticated and selective about rate increases in a hardening market—thereby retaining a competitive edge? Moreover, what if there are serious pitfalls to your traditional approach of across-the-board rate increases? Aaron Mayfield, director of commercial solutions for Marshall & Swift/Boeckh (MSB), proposes an alternative approach that balances rate increases with insurance-to-value (ITV) initiatives.

“In a hardening market, insurance carriers should move beyond ensuring 'rate adequacy' and actually assess their 'premium adequacy,'” Mayfield explained during a recent PropertyCasualty360 web seminar on “Insurance-to-Value: Optimizing your underwriting strategy and rate sophistication in a changing commercial market.” Instead of uniformly increasing rates, he said, “Carriers should balance rate increases with more proactive management of the insurance-to-value baseline in their books of commercial business.”