Auto Liability Market Trends: Q4 2013

Auto Liability: Q4 2013

Primary North American auto rate increases are averaging +3.3% countrywide, which continues a downward trend from +3.9% last quarter and +4.2% for the second quarter.

Auto Liability

Middle Market Accounts National Accounts Global Accounts
10% or more rate increase 2.2% 2.0% 0.0%
7.5% to 9.9% rate increase 3.3% 2.0% 4.3%
5% to 7.4% rate increase 24.4% 12.0% 17.4%
2.5% to 4.9% rate increase 31.1% 46.0% 21.7%
.01% to 2.4% rate increase 16.7% 12.0% 17.4%
Flat 21.1% 24.0% 34.8%
Down -.01% to -4.9% 0.0% 2.0% 4.3%
Down -5% to -9.9% 1.1% 0.0% 0.0%
Down -10% or more 0.0% 0.0% 0.0%
Average Rate Change Dec 2013 3.3% 3.0% 2.4%
Median Rate Change Dec 2013 3.4% 3.2% 1.9%
Average Rate Change Dec 2012 5.4% 4.0% 4.7%
Median Rate Change Dec 2012 5.3% 4.2% 4.5%

Auto Liability: Q4 2013Middle market average rate increases are about +3.3%  compared with  +4.0% to +4.3% at the last report. Rate changes are only down about 2 percentage points compared with December 2012. Approximately 30% of respondents, down about 10% from last quarter, are still reporting  rate increases in the 5-10% range.

National accounts reported average rate increases of about +3.1%, down from about +3.6% last quarter and down about one percentage point from a year ago. This is not as large as the drop that the middle market has experienced since last year. We expect this is because large accounts have the ability to moderate rate changes using retention strategies. About 16% of responses, down from about 30% last quarter, were in the ranges of +5% to 10%.

Average rate increases for global accounts are down from last quarter, falling to +1.9% to +2.4% from about +3.5% to +4.2% and down from about +4.6% a year ago.  Again the sample size is smaller for global so we would expect more volatility in the averages for this group quarter to quarter.

The auto liability market began turning between December 2011 and September of 2012, at which point the market continued firming but stabilizing for middle market accounts and actually improving a bit, stabilizing at a lower modal class, for large accounts. Middle market rate increases have improved since last quarter and are moving back to the +2.5% to +5% range for most placements, which is similar to the large account space.  This is an improvement since December 2012 for the middle market and we are also seeing similar movement since then for large accounts. We are seeing an increase in flat renewals for both middle market and large accounts.

Auto Liability Average Market Survey Rates

Industry Construction Real Estate Other
Average 3.3% 3.9% 3.3%
Median 3.4% 4.3% 3.3%

For construction, average auto rate increases are running around +3.3%, down from +4.6% to +5.1% in September. Real estate is running at around +3.9 to +4.3%, up from about +3.6% in September 2013.  Other industries are experiencing average auto rate increases of about +3.3%, down from about +4.0% last quarter. Real estate is now slightly higher than construction and other Industries where it was below both of these last quarter.

Auto Liability Market Survey Rate Changes by Region

West: 2.6% (down from last December’s

  • California:1.9%
  • Non-California West: 3.0%

Midwest: 3.1% (down from last December’s 4.2%)

South: 3.1% (down from last December’s 4.9%)

  • Southeast: 3.0%
  • Southwest: 3.5%

New York Metro: 3.3% (down from last December’s 4.2%) Atlantic

  • Atlantic South: 3.8% (down from last December’s 5.0%)
  • Atlantic North: 3.8% (up from last December’s 3.5%)

Regional average reported rate changes varied in a fairly tight range from a low of +2.6% to +3.8% with the Atlantic region coming in at the high end of the range. CA was actual lower at +1.9%.  The West region reported the highest average rate increases a year ago at +5.8% but are now reporting the lowest at +2.6%. The Atlantic North is the only region reporting a higher average rate change than a year ago at +3.8% vs. +3.5%.

Exposure Change

Virtually identical to last quarter, about 35% of respondents reported that vehicle counts were moderately increasing and about 55% reported they were flat. Hired and non-owned auto exposures continue to receive greater underwriting attention.

About Pamela Ferrandino

Pam has been with Willis since 2004 and is Executive Vice President, National Practice Leader for Casualty, Placeme…
Categories: Auto, Casualty

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