Moody’s: Health pricing increases foreseen

US property and casualty (P&C) insurers will see continued healthy pricing increases for commercial liability lines during the remainder of 2014, albeit at a slower pace than last year, says Moody's Investors Service in its new report US P&C Insurance Survey: Slowing Commercial Rate Increases as Insurers Shift Toward Growth.

For commercial liability lines, respondents (which include US P&C insurers rated by Moody's) are expecting average rate increases of about six percent for policies written in 2014, down from 7.5 percent in 2013. Although lower than last year, the rate increases are large enough to increase underwriting margins given that rate increases remain above loss ratio trends.

Insurers expect the largest rate increases in commercial auto liability, a line which has been under pressure in recent years as a result of rate declines, elevated loss ratio trends, and adverse reserve development for some accident years.

Commercial property rate increases, in contrast, are falling quickly and could even start declining toward the end of 2014 if there are no major catastrophe losses, and given lower reinsurance costs.