COVID-19 will have a dramatic impact on pricing for the rest of the year: MarketScout
US personal lines insurance buyers enjoyed favorable premiums with rates up 3.5 percent in the first quarter 2020 as compared to up 4.5 percent in the last quarter of 2019.
Rate increases for business insurance buyers were 4.5 percent in the quarter as compared to 5 percent in the last quarter of 2019.
Meanwhile, workers' compensation rates were down 1.25 percent, the only coverage with a rate reduction.
Homeowners rates adjusted the most with homes under $1 million in coverage A value being assessed with a rate increase of 3 percent in first quarter 2020 as compared to 4.25 percent in the fourth quarter of 2019. For larger homes over $1 million in coverage A value, the increase was down a full two percent from plus 6.25 percent to plus 4.25 percent.
“Rates in the first quarter of 2020 were mostly stable," said Richard Kerr, CEO of MarketScout. "The pricing impact of COVID-19 will be born out in the second, third and fourth quarter of 2020. Lower exposure base and the possibility of governmental intervention in coverage application will have a dramatic impact on the pricing for the rest of the year.”
Commenting on the personal lines rates, Kerr added: “We do anticipate continued rate increases in the non-admitted market, particularly in California and Florida. Many secondary and vacation homes are placed in the non-admitted market. The rates for these homes will be under even more pressure because of insurers’ concern insureds may not be maintaining the property in the midst of the COVID-19 crisis.”
