For businesses of all sizes and scopes, 2018 may be a year of rising commercial insurance prices, if 2017 trends continue – particularly with regard to property, auto rate and management liability.
According to the Marsh Global Insurance Market Index, global commercial insurance prices in the fourth quarter of 2017 increased on average for the first time in four and a half years. Specifically, average pricing increased by .0.8 percent in the fourth quarter, compared to a decrease of 1.9 percent in the third quarter. It should be noted that this percentage (e.g., 0.8) is taken as an aggregate across all lines of coverage; therefore, some more property-driven companies (e.g., property management companies, manufacturers or even construction firms) may experience significant increases in total premium. While a 0.8 percent average price increase may not seem like much, it actually is quite significant when you consider the prior 14 quarters showing decreases.
At Marsh & McLennan Agency, formerly Benefits Resource Group (MMA), we believe this “hardening” of the market – i.e., increasing prices with little or no flexibility – is traceable in some respects to catastrophic losses in the third quarter – most notably from hurricanes Harvey, Irma and Maria. Yet, other forces are in play as well. For example, increased rates for commercial auto insurance – particularly for large fleets with losses – are contributing to the hardening environment.
Even distracted driving has played a significant role in causing rates to rise. In fact, distracted driving has become a serious issue within the commercial auto realm for businesses of all sizes and scopes. According to insurance industry statistics, two seconds is the longest a driver can safely glance away from the road. Yet, sending or receiving a text takes a driver’s eyes off the road for an average of five seconds. Whether it’s texts, checking calendars, work emails or even Facebook, these actions, and the negative consequences that result from them, have impacted carriers to the effect that they are running at a 110% loss ratio. In simple terms, that means carriers pay $110 for every $100 they take in – and that in turn, drives up premiums to bridge the difference.
What Should Businesses Do?
Businesses could consider examining their current safety and employment programs (e.g., handbooks, written policies and safety manuals) and consider review by professionals specific to these areas. Such review could help to keep companies in compliance with current standards, regulations and best practices, and help ensure safety and profitability.
Additionally, as we move through spring into the summer months, this may be a good time to go to market to explore alternatives. At MMA, we offer the greatest reach with regard to carrier relationships. MMA maintains strong working relationships with all of the nation’s leading insurance carriers.
MMA is meeting this challenge with a comprehensive and innovative array of fleet safety programs. These include driver training, industry-leading technology platforms, drug-free policies and more; in each case, we help clients implement tools and processes that place greater emphasis on keeping drivers safe all without depleting budgets as these services are included. This, in turn, helps to create a safer company, therefore making your company a more attractive risk.
If you seek ways to improve your control over an ever-changing insurance market, or to learn more about our fleet safety programs, please contact Charlie Filisko, Vice President – Property, Casualty & Surety at Marsh & McLennan Agency, formerly Benefits Resource Group. Marsh & McLennan partners with privately held businesses, individuals and public companies that seek solutions that go beyond traditional employee benefits services to help them better manage their bottom line. You may contact Charlie by phone at 216-816-5506 or by email at Charlie.Filisko@mma-mw.com.
Disclaimer: This document is not intended to be taken as advice regarding any individual situation and should not be relied upon as such. Marsh & McLennan Agency LLC shall have no obligation to update this publication and shall have no liability to you or any other party arising out of this publication or any matter contained herein. Any statements concerning actuarial, tax, accounting or legal matters are based solely on our experience as consultants and are not to be relied upon as actuarial, accounting, tax or legal advice, for which you should consult your own professional advisors. Any modeling analytics or projections are subject to inherent uncertainty and the analysis could be materially affective if any underlying assumptions, conditions, information or factors are inaccurate or incomplete or should change.