Commercial property sees Q2 rate decrease, first in 27 quarters

Commercial property insurance rates entered negative territory for the first time in 27 quarters with a second-quarter average rate decrease of 0.94% as capacity increased and pricing eased, according to a report Tuesday from Aon PLC.

But rates varied with desirable occupancy classes and natural catastrophe-exposed accounts excluding Florida seeing rate decreases of up to 10% in the quarter, while rate increases were up to 10% or higher for Florida-only or natural catastrophe-exposed Florida accounts, Aon said in its latest pricing report.

Broad market conditions continue to moderate, especially for natural-catastrophe-exposed businesses, and rate dynamics are expected to continue in the third quarter, Aon said.

Policyholders with shared and layered programs saw rates decrease 3.18% on average for the quarter ended June 30, compared with a 0.05% decrease in the first quarter.

Single insurer rates increased 3.1% on average, down from 6.68% in the first quarter.

“Capacity is helping to moderate pricing,” Vincent Flood, U.S. property practice leader for Aon, said in a statement.

“Clients can expect an aggressive underwriting approach for shared and layered accounts with desirable occupancy classes and profitable historic loss ratios, with or without heavy nat-cat exposures,” Mr. Flood said.

Loss-challenged or less desirable occupancies saw flat to 5% rate increases in the quarter.

The average second-quarter rate decrease of 0.94% compared with a 3.4% rate increase in the first quarter. Rates were last in negative territory in the third quarter of 2017.