MarketScout tracks composite rates for the personal lines market in the U.S.
“We have been tracking personal lines rates since 2012,” noted Richard Kerr, CEO of MarketScout. “Since then insurers have been steadily increasing rates with the exception of the erratic rate direction over the last fourteen months. Generally, personal lines insurers do not adjust pricing as aggressively as their commercial brethren.”
As a result, MarketScout says even though 2016 has been a topsy-turvy year with regards to rates in the personal lines market, it actually closed out the year up 2%.
For example, the rates in December prove illustrative. Last month, homeowners’ rates for homes valued under $1,000,000, cites MarketScout, adjusted from up 2 percent to up 3 percent. As for homeowner rates on homes over $1,000,000, those adjusted from up 1 percent to up 2 percent.
In comparison, MarketScout notest that automobile insurance rates were unchanged from November to December. Personal articles, however, saw the largest increase with a composite rate rise from flat to up 2 percent.
|Homeowners under $1,000,000 value||Up 3%|
|Homeowners over $1,000,000 value||Up 2%|
|Personal Articles||Up 2%|
AM Best is also maintaining its stable outlook on Personal Lines
Generally strong property performance has somewhat mitigated deteriorating auto performance – AM Best
With the majority of 2017 still before us, AM Best has decided to maintain its stable outlook noting that personal lines companies’ responses have been “appropriate” considering the challenges and changes facing the market place.
In its most recent briefing entitled, “Personal Lines Outlook Remains Stable Despite Continuing Pressure on Auto Results” the rating firm notes that:
While the vast majority of companies have achieved rate increases in the auto line, the effectiveness of these rate actions have varied, reflective of the wide disparity in the pricing granularity that companies employ. Those companies that have the ability to ensure rate activity is laser-focused, through advanced pricing segmentation and ultimately usage-based insurance, will be the best-positioned to improve overall financial performance. Conversely, those that employ a less sophisticated or broad-based approach will likely experience some level of adverse selection in this mature, hypersensitive competitive market…
AM Best also notes in its report, that while in the coming year things look to remain the same with the majority of rating actions in the sector to be affirmations, companies without a “clear defensible competitive advantage, diversification, or a niche market” as well as those that fail to embrace the technological changes happening in the marketplace may be in for rougher waters ahead and may be at risk for negative rating actions in the future.