Commercial insurance rates are expected to rise double digit in 2001 because of a hardening property & casualty market.  Best’s Review (a monthly publication of the A.M. Best Company) projects a 10% average increase of premium in the commercial market.  Factors that are driving the rates up are higher medical costs, a jump in repair and/or replacement costs and generous jury awards in liability cases.

According to the National Underwriter’s January 1, 2001 edition, the 2000 industry overall operating ratio will increase to its highest point since 1994 while premiums are forecasted to be at a ten year low.  The graph in Chart A shows the industry’s overall operating ratio performance compared to the premium cost for the past ten years.  Insurers’ profits are expected to shrink and in some cases disappear completely. 

Because of the recent trends the following repercussions are expected to occur in 2001:

Significant price increases are expected in commercial auto, workers’ compensation, property and general liability segments.  Workers’ compensation will be fighting the problems of past underpricing because of intense competition.