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California takes pole position on commercial auto rate increases in Q3

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According to Market Intelligence, December 2022


California takes pole position on commercial auto rate increases in Q3

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U.S. states employ a variety of rate regulation mechanisms, including prior approval, modified prior approval, file and use, and use and file. Some states do not require explicit regulatory approval prior to insurers using new rates. This analysis is based on when rate filings are "disposed" by state regulators and does not take into account when those new rates became effective for new and renewal business. In some instances, a new rate may have been in effect prior to the month the regulator approved the filing.

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California regulators signed off on nine commercial auto insurance rate-hike requests during the third quarter, which are expected to generate an aggregate $62.4 million in premiums written across the industry, according to an S&P Global Market Intelligence analysis.

About 87% of that projected cumulative increase will likely come from the three most impactful commercial auto rate hikes during the period.

California expects the largest commercial auto premium increases from rate hikes approved in the third quarter. Next in line was Texas, which should see premiums written rise by $59.6 million from 70 rate increases disposed during the period.

Progressive hikes in 17 states

Among all the insurers in this analysis, The Progressive Corp. will likely have the largest aggregate positive premium impact at $77.2 million from 21 rate increases approved across 17 states in the third quarter. Four of the group's rate hikes were among the 10 most notable increases approved during the period. They are anticipated to account for 71% of Progressive's expected premium gains.

Progressive unit United Financial Casualty Co. obtained what looks to be the most impactful single rate increase disposed during the quarter. The 6.4% rate hike in California would boost Progressive's premiums by $27.6 million. The rate increase took effect Aug. 5, for both new business and renewals.

Liberty Mutual Holding Co. Inc. received the most number of approvals for rate increases during the period and is projected to see the second-largest aggregate positive premium impact. The 79 rate hikes approved for the group are expected to bolster its written premiums by $35.6 million.

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SNL Image* Read a report on the U.S. private and commercial auto insurance business.
* Use this template to analyze rate changes for selected entities, state or type of insurance over a selected time period using interpretive charts and histogram .

Old Republic tops rate cut chart

At the other end of the spectrum, Old Republic International Corp. is expected to record the largest aggregate negative premium impact at $1.2 million thanks to two rate reductions disposed during the quarter. The bulk of the calculated decrease will come from a 27.7% rate cut in Colorado that went effective on March 1 for both new business and renewals.

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