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june 7, 2013
Insurors is in Planning for 2013 ACA Seminars
Continued Weather Losses Affect Industry Pricing With Tropical Storm Amanda heading up the coast, and cleanup from the May tornados still going on across Oklahoma and the Midwest, insured losses in the U.S. are expected to top $5 billion for the Spring alone. At least 76 tornados touched down in the prolonged severe weather event that ravaged parts of Oklahoma. An EF-5 tornado with 295 mph (475 kph) winds and a U.S.-record 2.6mile (4.2-kilometer) path width struck the town of El Reno. A large hailstorm also struck in Texas, causing over $400 million in insured losses in Amarillo.
“Regardless of the value of your home, most insureds had premium increases for renewals in May,” MarketScout CEO Richard Kerr says in the monthly report. “Perhaps the numerous tornados or the pending hurricane season had an impact on pricing. We feel the increases are driven more by underwriter’s sentiment than actuarial projections.”
The National Oceanographic and Atmospheric Administration (NOAA) has reported that this year’s hurricane season could be extremely active, with 13 to 20 tropical storms.
Overall, Property & Casualty personal lines pricing rose 4% on average in May, compared to May 2012 rates, according to MarketScout. Auto was up 4% and personal articles pricing was up 3%. Meanwhile, commercial lines pricing increased an average of 5% over May 2012 rates, marking the third consecutive month that the composite commercial P&C rate rose 5%.
So, what do all these severe weather losses mean for the insurance industry as a whole? Marketscout, an insurance distribution and underwriting company based in Dallas, is reporting that Homeowners rates rose 4% in May over 2012’s pricing.
Although pricing increases are expected to continue, insurance companies are currently well-capitalized to deal with storm losses. Aon Risk Solutions has reported that insurers currently sit on an all-time high surplus of $600 billion.
Insurors of Tennessee Web: www.insurors.org Ph: 615.385.1898 or 800.264.1898 Fx: 615.385.9303 E-mail: info@insurors.org
Many agents are anxious over the inevitable implementation of the Affordable Care Act in January of 2014. In addition to the outstanding questions regarding agent involvement, are more basic question such as, “How will it work?” and, “What about my small business customers?” Information has been slow to be released regarding the SHOP exchange and what options small businesses will have should they want to continue to offer coverage for their employees. Recently, the Centers for Medicare and Medicaid Services (CMS), which will be handling the majority of the transition, presented an Agent/Broker webcast in order to answer some outstanding questions. The slides are available at http://www. insurors.org/Content/NavigationMenu/ PDF12/CMSACA-slides.pdf The presentation offered a first look at the SHOP exchange which will begin in 2014. There will be plans available for review beginning October 1, 2013. This will apply to employers who have fewer than 50 full-time equivalent employees. Those who choose the SHOP option must offer the coverage to all full-time employees (30+ hours per week). It is expected that for 2014, employers will choose one plan for their employees. In subsequent years, it is anticipated that employees will have options under the continued on page 2
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