WASHINGTON, D.C., July 22, 2009 – Rates for commercial property/casualty premiums idled during the second quarter of the year, according to The Council of Insurance Agents & Brokers’ quarterly Commercial P/C Market Index Survey.
“We saw no significant change in pricing trends from the first quarter to the second quarter,” Council President Ken A. Crerar said. “If a hard market is coming, it’s up the road a bit. The pricing appears to be more a result of the weak economy than capacity.”
One broker noted, “Most carriers have realized that the market is not hardening as expected. We are reverting back to 2008 underwriting practices.”
“No change – competition remains fierce,” a broker from the Northeast said. Still, some carriers are trying to raise prices on renewals while aggressively competing for new business, the survey showed.
Other brokers echoed that view. “Carriers are more aggressive on new business since it appears all carriers’ new business numbers are down.”
“New business pricing [is] much different than renewal. [Insurers are] attempting to gain rate increase on renewals and more aggressively pursue new business.”
While the market generally remains competitive, the brokers surveyed reported some coverage problems in the market.
According to a broker in the Southwest, “The only problem areas continue to be the CAT zones (CA quake and coastal wind).”
A broker from the Southeast is seeing a tight market in East coast property and D&O for financial institutions. “No problems other than Cat and financial industry D&O.”
Another said, “Workers’ comp has been affected tremendously – appetite has tightened and more companies are declining to write the coverage.”
Overall rate declines for small, medium and large accounts were fairly consistent with decreases in the first quarter of the year. Average rates declined 4.9 percent in the second quarter compared with a 5.1 percent decline in the first quarter.
On average, large accounts declined 6.7 percent compared with the first quarter decline of 6.4 percent. Midsize accounts dropped on average 5.7 percent, about the same decline as in the first quarter. The rate of decline for small accounts was 2.5 percent compared with 3.3 percent in the first part of the year.
Source: The Council of Insurance Agents & Brokers. Chart prepared by Barclays Capital Equity Research.
When asked if they saw any improvement in the market or the economy impacting their business in a positive way, an overwhelming 84 percent of brokers said “no.” The economy remained at the top of the list of the most critical political issues facing the U.S. today, followed closely by health insurance reform.
Click here to see the full survey results.
Founded in 1913, The Council is the premier association for commercial insurance and employee benefits intermediaries. The Council represents the leading commercial brokers and agents in the United States and abroad. Council members annually place 80 percent of all commercial property/casualty premiums in the United States and administer billions of dollars in employee benefits accounts. www.ciab.com