Most Commercial Lines Saw Premium Increases during First Quarter

Nearly all major commercial insurance lines experienced quarter-over-quarter premium renewal rate increases during the first quarter of 2021, according to the January IVANS Index, a regular premium renewal rate index compiled by the IVANS insurance exchange service.

Index results for the first 3 months showed premium renewal rate increases for all major lines year over year except for workers compensation, which remained negative. The first quarter experienced an increase in average premium renewal rate change across general liability, commercial property, umbrella, and workers compensation compared to the fourth quarter of 2020.

Premium renewal rate changes by line of business in the first quarter and 2021 highlights include the following.

• Commercial auto. The first quarter average premium renewal rate was 4.25 percent, a decrease compared to the average premium renewal rate of 4.46 percent in the fourth quarter of 2020. The quarter began with a high of 4.45 percent and ended with its low of 3.91 percent.
• Business owners policy (BOP). The BOP premium renewal rate dropped in the first quarter with an average of 4.53 percent compared to 4.57 percent during 2020's fourth quarter. The quarter reached its highest rate in February, averaging 4.59 percent, and saw its low in January at 4.46 percent.
• General liability. The first quarter premium renewal rate rose compared to the fourth quarter of 2020, averaging 3.74 percent. The first quarter premium renewal rate experienced its high in February at 3.93 percent and its low in March at 3.61 percent.
• Commercial property. Average premium renewal rate change for commercial property increased quarter over quarter at 5.81 percent versus 5.62 percent during the fourth quarter of 2020. The quarter's premium renewal rate change experienced its low at the start of the quarter in January at 5.63 percent and its high in February at 6.13 percent.
• Umbrella. First-quarter premium renewal rate changes for umbrella coverage averaged 4.24 percent, an increase from 3.46 percent during the fourth quarter of 2020. Umbrella premium renewal rate changes experienced their high in January at 4.29 percent and their quarter low of 4.18 percent in March.
• Workers compensation. Workers compensation premium renewal rates averaged -1.37 percent in the first quarter, up from -2.13 percent in the fourth quarter of 2020. The quarter's premium renewal rate reached its high of -1.02 percent in January and its low of -1.64 percent in March.

"The IVANS Index is showing early indications of hardening market conditions in 2021 as average premium renewal rates in the majority of the major commercial lines of business increased relative to Q4 2020," Kathy Hrach, vice president of Product Management, IVANS Insurance, said in a statement. "While commercial auto and BOP are among those that decreased quarter over quarter, they reflect small downticks compared to the large increases in premium renewal rates that other lines of business experienced last quarter."

Released on a monthly basis, the IVANS Index analyzes more than 120 million data transactions to measure premium renewal rate change year over year across the US market.