Nationwide E&S will stop writing wholesale-driven contract binding commercial auto new business, including primary brokerage auto effective July 15, according to an announcement released to Nationwide brokers this week and obtained by Insurance Journal.
Beginning September 1, Nationwide E&S will begin non-renewing all in-force policies as well. The company said it will honor current quotes for 60 days.
“Our Binding Authority business has been on a journey to evaluate our current portfolio and identify the products that will meet our target return threshold. After an extensive analysis of our wholesale-driven Commercial Auto portfolio, we have made the difficult decision to exit all segments of this book, including brokered complex risk,” said David Nelson, E&S Wholesale in the internal announcement.
“The tough decision to exit is not taken lightly,” Nelson added. “While I’m proud of the work that has been completed over the past five years to improve the commercial auto combined ratio, ongoing challenges continue to face the entire industry. We’ve concluded the return prospects will be considerably lower than needed to justify the capital allocated to this segment of our business.”
Nationwide could not immediately be reached for additional comment.
Pending changes to Nationwide’s overall portfolio have been expected. In a June 12 “business actions update” Nationwide announced moves “to mitigate risk and manage the personal and commercial lines portfolios in the current environment.”
“Strong headwinds brought on by the economic environment, catastrophe weather events, and the impact of inflation continue to impact the entire insurance industry,” according to the statement from Nationwide at the time. The announcement did not specify lines of business or regions affected by the actions.
Even with higher commercial auto premium rate increases, claims severity tied to higher parts and repair costs and litigation exposures continue to challenge the commercial auto line in 2023, according to the latest U.S. Commercial Lines Market Update released by Fitch Ratings. The combined ratio for commercial auto rose to 105 in 2022, up five points from 2021.
Commercial auto premiums saw double-digit first-quarter price increases for the 22nd straight quarter, but they were slightly lower than fourth-quarter 2022, according to WTW’s Commercial Lines Pricing Survey (CLIPS) released in early June.
(This article was originally published by Insurance Journal. Reporter Andrea Wells is the editor of Insurance Journal)