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Friday July 23, 06:22
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P/C market softens in second quarter
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(by Dr. Goldfinger)
The commercial property/casualty insurance marketsoftens continued to soften during the second quarter of 2004, according to the Council of Insurance Agents & Brokers’ latest commercial marketsoftens index.
Thirty-six percent of the small accounts, 57% of the medium accounts and 53% of the large accounts experienced premium rate decreases of as much as 20% during the second quarter of 2004, according to the 157 brokers from across the country that responded to the index.
For the number of commercial clients that did receive premium increases, the hikes were generally between 1% and 10%, brokers said.
More specifically, the average small commercial account experienced a 1% premium decline, while medium accounts averaged a 3% decline, according to the index. Large commercial accounts experienced the largest premium decrease last quarter, averaging 6%.
Even the most difficult-to-place commercial lines business—including directors and officers liability, general liability, umbrella, commercial auto and workers compensation—is stabilizing, according to the CIAB. More than 50% of these accounts experienced no premium change or increases of 1% to 10%, they said.
“Terms and conditions are still tight, but we are seeing accelerated decreases in premium rates and a return to competition to the marketsoftens,” said Ken A. Crerar, president of the Washington-based CIAB, in a statement. “The questions now are: how far and how fast will those rates come down? There are some mitigating factors, such as reserve levels and the overall economic recovery, that could serve as brakes on the marketsoftens.”
A small account is defined as one generating less than $25,000 in commission or fee revenue; a medium account generates between $25,000 and $100,000; and a large account generates more than $100,000, according to the CIAB.
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