2011 marked the second costliest catastrophic loss year in history with natural and man-made losses of approximately $110 Billion. Although California, and specifically social service agencies, were not directly affected by these disasters, it will have an impact on overall rates in 2012. If global underwriting losses remain high (combined ratios hit 108 percent in 2011) and reserves continue to be depleted, insurers may be forced to raise rates.
However, high market capacity may have a dampening effect on rate increases. Although rates may remain flat or increase modestly in 2012, increases are not likely to be across the board. Below is a summary by line of coverage. Remember that individual loss history and exposure increases/decreases will dictate the final premium.
Workers’ Compensation – Rates are projected to increase significantly in 2012. The California Worker’ Compensation market has suffered four years of underwriting losses. The Workers Compensation Rating Bureau suggested close to a 40% increase in overall rates. The average rate is still about 50% less than the high back in 2005.
Property – Due to the high catastrophic property losses mentioned above, we project property rates to be flat to slightly up in 2012. Firms who experienced losses in 2011 can expect to see high single digit increases at renewal.
General Liability – Rates are projected to be stable in 2012.
Professional Liability – Rates are projected to be stable in 2012.
Auto – Rates are trending up slightly for auto coverage in 2012.
Directors & Officers/Employment Practices Liability – Due to an increase in claims related to Employment Practices as well as Wage & Hour claims both rates and deductibles are projected to increase in 2012.