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Commercial insurance rates will continue to increase in 2021



Buyers of real estate / accident insurance, who in many cases have undergone price increases for more than a year, are likely to see interest rate increases until 2021, with some lines continuing to see double-digit interest rate increases, experts say.

However, the size of the increases can be blunted, as the hardening market draws new capital and insurance companies want to take advantage of the rising tide.

A recent survey by brokers Alera Group Inc., which included insurers, wholesalers and Alera's agents and brokerage firms, showed an average forecast interest rate increase across all lines of 11.6% next year, with increases of no more than 17.5% for medical malpractice insurance to a low of 4.7% for compensation to workers.

The survey was conducted in the third quarter, says Mark Englert, head of national property and accident at Alera in New York. He said the increases are driven by insurers' attempts to return lines to profitability.

"When you start going by industry, you can see why certain lines are more aggressive in tax rate requests," Englert said. .

For example, Workers comp has been profitable for insurance companies since 201

2 and showed an insurance result from 2015 to 2019. However, commercial car was unprofitable from 2015 to 2019 and generated insurance losses from 2012 to 2019. [19659002] In addition, low interest rates have limited insurers' ability to compensate for insurance losses with investment income. "Investment income is being challenged, so what you see in the carrier is a real need to drive strong subscription results," Englert said. Insurers' "books were not profitable," said Renee Dube, vice president, national property and accident management, in Valhalla, New York, for USI Insurance Services LLC.

In its recently published commercial real estate / accident market outlook for the fourth quarter of this year and the first half of 2021, USI predicts that at one end of the price spectrum, workers may rise up to 5%, while at the other end, public business executives and executives see insurance tax rates up to 100%.

The hard market "will probably be for some time," said J. Paul Newsome Jr., Chicago-based investment broker Piper Sandler Cos.

Mr. Newsome noted, however, that higher interest rates and premiums attract new capital, which may help lower interest rate hikes. "Private equity has quickly sought to build new businesses, and this could reduce the length of the tough market," he said.

"Challenging conditions continue to exist across most coverage lines in the United States, but especially in the umbrella / excessive market and executive liability market," said Christopher Lang, Global Investment Manager, United States and Canada, for Marsh LLC in New York, in a statement per. e-mail to Business Insurance . "We expect these conditions to persist until 2021."

Next year, "sustained interest rate hikes and solid core insurance margin expansion for most commercial, specially specialized insurance lines and for reinsurance ", according to a December 18 report by Meyer Shields, Baltimore-based CEO of Keefe Bruyette & Woods Inc.

" Increased property and loss cost inflation, depressed investment rates and rising reinsurance costs should support lasting rate hikes for most commercial lines, " he said in the report.


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