Commercial pricing can hold trend, headwinds in financial lines

The  Hartford Insurance Group is expecting pricing in commercial insurance in 2023 to hold a trajectory laid down in 2022 with a hardening market in property and catch-up gains in automotive partially offset by headwinds in select financial lines.

Total renewal written price increases in commercial lines, excluding the Hartford’s mainstay business of workers’ comp, looks “fairly stable compared with 2022,” CEO Christopher Swift told his company’s Q4 earnings call. Swift put his company’sQ4 price gain in commercial at 4.9% or 7.9% ex-workers comp.

Swift expects “meaningful increases in standard commercial property, auto and general liability pricing somewhat offset with competitive pricing headwinds in parts of our financial lines business.”

Commercial loss cost trends, in turn, are expected to “remain fairly stable” with “some moderation in property severity as inflation is expected to ease during the second half of the year.”

Personal lines have some work to do in order to keep pace with loss cost, but should be “tracking back to target margins.”

Auto renewal written price growth should accelerate into the mid-teens by the second quarter “and then remain there for the balance of the year,” Swift said. “By mid-year we expect new business to be price adequate” as the industry turns the corner on inflation/severity-driven loss cost by mid-year.

Homeowners should enjoy earned pricing “to generally keep pace with loss cost trends throughout 2023.”

The Hartford’s reinsurance book should enjoy “meaningful written price increases” including over 30% on the US and European property coverage, Swift indicated.

Swift admits to further downside in workers’ comp pricing, but argues that the line “remains a highly profitable business” with “margin strength and a stellar contribution to our overall commercial line results.”

Renewal pricing in the segment should be “flat to slightly negative” with a “slight” increase in loss cost to crimp margin.

For 2023, Hartford is forecasting a 90.5 to 92.5% combined ratio in commercial and an underlying ratio some 3 percentage points below that.

In personal lines, the Hartford admits to a pending technical loss with combined ratios at 100.5 to 102.5%, covering an underlying performance better framed in a 93 to 95% range.

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