With 2018 on the horizon now is a good time to look into our crystal ball and forecast what we see in the year ahead for commercial insurance products.
Automobile: Commercial auto premiums are expected to continue to rise this year as claims activity continues to increase. Claims are being driven by three factors:
- More miles driven by motorists due to an expensive gasoline.
- Vehicles that are more expensive to repair because they are loaded with technology.
- Distracted driving caused primarily by texting or in-vehicle information screens.
Collectively these trends will continue to put upward pressure on auto premiums in 2018 and it will not be surprising to see some risks receive double digit increases.
Property: Hurricanes Harvey, Irma, and Maria along with the Mexico earthquake are putting pressure on reinsurance prices with some industry pundits forecasting price increases a 20 percent starting on January 1. We have not yet seen this translate into actual premium increases anywhere close to that; in fact, pricing so far has remained fairly flat. With that said, it is reasonable to expect that property premiums will rise to some extent as we get further into 2018, although we do not expect it to match dollar for dollar the amount of the increase in reinsurance prices.
Worker’s Compensation: The Florida Office of Insurance Regulation approved an average workers compensation rate decrease of 9.5 percent effective January 1, 2018. Employers will reap the benefit of this to decrease as their policies renew. Underwriter appetites remain robust for many, but not all, classes of business.
Liability: Premium increases for liability lines look to remain relatively flat with the possible exception of Employment Practices Liability. The well-publicized sexual harassment events during the last quarter of 2017 have drawn increased attention to this line of business, from claimants and underwriters alike. The impact on pricing remains to be seen, but increases and tightened underwriting would not be surprising
Cyber: During the last half of 2017 Cyber premiums were been flat and in some cases decreased, particularly for larger accounts. Recent increases in the value of Bitcoin has cause a surge in the value of Cyber claims as hackers have not adjusted their ransom demands: A ransom demand payment of five Bitcoin that was made in June, 2017 (when a Bitcoin was $2,000) has remained a five Bitcoin demand in December, 2017 (when a Bitcoin was $17,000). Although both were five Bitcoin claims, the June claim was $10,000 and the December claim was $85,000. Expect underwriters to adjust accordingly.
Your individual risk characteristics, including claims history, quality of management, commitment to safety, risk management practices, and financial strength will also factor into premiums as the renew.
We look forward to working with you in 2018!
Treweek Insurance Agency, LLC