WASHINGTON April 19, 2006 – Commercial property/casualty rates were flat or fell slightly during the first quarter of 2006, with renewal premiums for half of all account sizes holding steady or dropping between 1 and 10 percent in the first three months of the year.
In the latest commercial p/c market survey by The Council of Insurance Agents & Brokers, 15 percent of the brokers responding said small accounts received premium quotes at renewal that were between 10 and 20 percent lower than similar quotes received during fourth quarter 2005. And 22 percent and 24 percent of the brokers, respectively, said medium and large accounts were down between 10 and 20 percent from the previous quarter.
The Council represents the leading commercial insurance agents and brokers in the United States and around the world. Council members write more than 80 percent of the commercial property/casualty premiums in the United States and administer billions of dollars in employee benefit accounts.
The Council’s Commercial Property/Casualty Market Index Survey is the longest running market survey in the industry, dating back to the fourth quarter 1999.
According to an analysis of The Council data by Lehman Brothers Equity Research, the average commercial p/c account renewing in the first quarter of 2006 experienced a rate decline of 2.7 percent.
The Lehman analysis and broker responses to open-ended questions in The Council survey suggested that the rate of decline in premium prices is slowing and in some cases, premiums may be stabilizing. The exception is in the coastal regions of the country where both commercial property capacity and wind coverage are problematic.
“Suddenly, after January 1, carriers wanted a flat (rate) or rate increase on renewal. This was in contrast to the rate reductions we saw prior to year-end. It came with no warning,” said a surveyed broker from the Southwest.
The pattern of stable to slightly reduced premiums on renewal accounts was evident across virtually all commercial p/c lines. The commercial p/c accounts most likely to experience premium rate increases at renewal, albeit relatively modest increases of between 1 and 10 percent, were commercial property, commercial auto, business interruption, medical malpractice, terrorism and broker E & O accounts.
“Overall rates are down EXCEPT for property cat exposures (which are) up more than 25 percent,” said a broker from the Midwest.
In responding to open-ended questions, brokers said as the next hurricane season rapidly approaches, Florida property capacity is limited, and coastal wind capacity is quickly diminishing.
“In personal lines, we are just about non-existent except for the state-run Citizens Insurance Co. The majority of the market has pulled out or is on standby getting decisions from management or reinsureds as to proposed action,” said one broker. “In regard to commercial, we are seeing increased property rates as a result of the continued multiple storms that occurred in Florida in 2004 and 2005.”
“Limited wind capacity,” said another respondent from the Southeast. “It takes 10 carriers now to do what two did last year on layered programs.”
For complete regional and national data charts, go to http://www.ciab.com/marketsurveyQ106.
About The Council of Insurance Agents & Brokers
The Council of Insurance Agents & Brokers is the voice of the market leaders and the premier association for commercial insurance and employee benefits intermediaries in the United States and abroad. From its headquarters in Washington, DC – with programs conducted throughout the nation and world – The Council represents leading commercial insurance agencies and brokerage firms. Only the top one percent of all agents and brokers qualify. The Council’s members in more than 3,000 locations, place 80 percent — well over $90 billion — of all U.S. insurance products and services protecting business, industry, government and the public at-large, and they administer billions of dollars in employee benefits. Since 1913, The Council of Insurance Agents & Brokers has worked in the best interests of its members, securing innovative solutions and creating new market opportunities at home and abroad. Web site: www.ciab.com.