Andy Halstead finds some inconsistencies, as well as big rises in motor lines
Rates in the commercial market have hardened since the new year, according to Andy Halstead, AXA’s head of partner brokers.
In a message to brokers earlier this month, Halstead said most insurers were raising their prices. “We are now two months in and rate increases are a reality in the commercial marketplace,” he said.
“There is still inconsistency with a number of insurers – usually those that are relative newcomers to the commercial market – not attempting to harden rates but most are maintaining their underwriting discipline and carrying rate increases.
“This is being done to different degrees, with some appearing to be prepared to let profitable business walk if specific increases are not carried. But most are adopting an approach where negotiation is possible.”
The biggest increases were in motor lines, he said – backing up a prediction made in January by Patrick Smith, Swinton’s boss, that motor rates would increase by 20%. The AA predicted they would go up by 10%.
Halstead said: “Given that the motor market usually leads ahead of the commercial market, this is good news for insurers and brokers alike.
“Increases on non-motor classes are tougher and results more varied. Trade-specific factors also need to be taken into account – particularly construction and motor-related trades.
“The construction industry, for example, faced with a downturn in work, is reducing forecasts of wages and turnover.
“For larger risks there is still appetite to write business, which makes rate strengthening tougher, but on smaller cases increases can and are being carried. This to me appears to be the start of the market hardening.”
Paul Moors, group chairman of Bollington, agreed that insurers were trying to push up rates. “But there has been differential rating, whether it is renewal rating or new business,” he said.
“I think they are still coming in at much lower rates at times.”