Commercial Lines

Mike McAvinue – Vice President of Commercial Lines

The insurance industry is constantly undergoing changes that are likely to impact business owners.  At Hertvik Insurance, we monitor these changes so we can help our clients navigate them with confidence.  The most significant changes we see today revolve around pricing, new technology, and some emerging lines of business.

Property-Casualty pricing remains favorable overall with modest increases averaging 3.5% in Q1 2019, according to The Council of Insurance Agents & Brokers. Commercial Property, General Liability, Inland Marine, and Umbrella lines should remain competitive through 2020.

While overall pricing is favorable, profitability in Commercial Auto remains a significant challenge for many insurers. Distracted driving and the increased cost of vehicle repairs are making this line of business increasingly unprofitable.  A minor fender-bender ten years ago resulted in a repair bill of $600 for a new bumper; today that same fender-bender can easily cost $4,000 because of the electronics and sensors now found in many bumper systems.  As a result, we expect commercial auto rate increases to continue while some carriers also pullback in terms of their appetite or demand higher deductibles. Businesses with a history of auto-related losses will bear the brunt of these actions.

Technology heavily influences the insurance industry, and continually developing technological advancements will ultimately benefit insureds by improving carrier efficiency and rate accuracy. Developments including predictive analytics, artificial intelligence, the Internet of Things (IoT), and telematics are just a few heavy influencers.  We’ll dive deeper into these areas in an upcoming issue.   

Beyond rate and tech trends, we see a significant uptick in demand for some specific areas of coverage. Cyber Liability, Employment Practices, and Directors and Officers coverage have dominated many of our conversations in 2019. As the demand for these coverage options increases, more carriers have begun offering them, resulting in better pricing and more choices.

Overall, industry pundits foresee continued pricing stability in commercial lines.  AM Best, a credit rating agency tasked with predicting the future health of the insurance market, has a stable market outlook for commercial lines in 2019. 

For more information, please reach out to your Hertvik Insurance Group representative.    

Hertvik Insurance
800.467.3254 – www.hertvik.com