Premium increases set to continue in 2018

However, some lines will still struggle, report finds

Premium increases set to continue in 2018

Insurance News

By Jordan Lynn

The long awaited turn of the commercial insurance cycle will continue in 2018, a new report from J.P Morgan and Taylor Fry has found.

The 2017 General Insurance Barometer released by both firms yesterday suggests that insurers will look to claw back profitability in most commercial lines over the coming year, with premium rate increases expected throughout the market. It added that premium rates increased in commercial classes in FY17 to +3%, from -1% last year.

Kevin Gomes, Taylor Fry principal and senior actuary, said that while the rate increases may be long overdue, certain lines will still endure a muted turn.

“You are seeing in fire and ISR and commercial motor, some healthy increases there following years of decreases on those products,” Gomes said. “Some of the other commercial classes – workers comp, public liability, professional indemnity – are showing more modest increases. While the cycle is turning it is turning less sharply on the liability lines.”

The report notes that fire and ISR saw an increase of 5% over 2017, with an expected 8% increase in rates set for 2018. Commercial motor saw prices rise 4% last year with a prediction of 6% increases in 2018. Public liability saw just a 1% increase over 2017 with a 3% boost expected in 2018, while professional indemnity prices dropped 2% in 2017 with a turnaround of 2% increases expected this coming year.

Gomes added that among the liability lines D&O is the exception as the well-publicised problems in the market continue to impact pricing. D&O saw prices rise 13% over the course of 2017 with further increases of 21% expected as combined ratio for the troubled market spiralled past 150%.

“With D&O it is a product that suffered from quite high claim inflation and frequency, and the profitability has been poor so it is really the industry trying to keep pace with some adverse claim trends for that particular product,” he explained.


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