feel are well managed and in a desired business class.
DALLAS—The composite property
and casualty rate was down five per-
cent for February 2010. Richard Kerr,
CEO of MarketScout, profiled the
current market conditions by stating,
“The last six months have actually
been quite consistent with rate reduc-
tions bouncing between four and five
percent each month. There will always
be some changes month to month,
but generally we are seeing a consis-
tent pattern of pricing in most cover-
age classes. However, coastal property
rates in select geographic locations are
firming.”
raising rates beyond a certain point.
Some of these insurers feel they are un-
able to achieve a reasonable premium
and are choosing to reduce their expo-
sure because they cannot achieve “rate
Alliance with the Alliance The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout’s analysis of market conditions. These surveys help to further corroborate MarketScout’s actual findings, which are mathematically driven by actual new and renewal placements across the United States.
“The last six months
have actually been quite
consistent with rate
reductions bouncing
between four and five
percent each month.”
Richard Kerr
Summing-Up A summary of February 2010 rates by coverage, industry class and account size is set forth below.
Kerr further explained, “While prop-
erty rates were down 5% on a na-
tional basis, rates for wind capacity
in the Gulf Coast, Florida, and the
East Coast up to and including North
Carolina are moderating or increas-
ing. Admitted insurance companies in
some coastal states are restricted from
adequacy.” In addition, several large
non-admitted insurers who tradition-
ally offer coastal property capacity are
simply choosing to sit on the sideline
as they wait for rates to increase.
Rumors and Rates Rumors persist that there will be two new entrants in the coastal property market before July 2010. However, this new capacity will not result in rate reductions, because these insurers are entering the market at a time when they hope to catch rates on the upswing. “It’s a pretty good bet coastal property rates are going to increase soon,” Kerr concluded.
By Coverage Class Commercial Property ........ Down 5% Business Interruption ........ Down 1% BOP .................................. Down 2% Inland Marine ................... Down 4% General Liability ............... Down 5% Umbrella/Excess ................ Down 4% Commercial Auto.............. Down 4% Workers’ Compensation .... Down 5% Professional Liability ......... Down 2% D&O Liability .................. Down 1% EPLI ................................. Down 1% Fiduciary ........................... Down 1% Crime................................ Down 1% Surety ................................ Down 2%
Small, up to $25,000......... Down 3% Medium, up to $250,000.. Down 5% Large, up to $1,000,000.... Down 7% Jumbo, over $1,000,000.... Down 5%
One other area of interest is the continued competition in large accounts ($250,000 to $1,000,000 premium) where rates have decreased from minus five percent in January to minus seven percent in February. The competitive nature of this market segment is driven by two primary factors: ( 1) the large number of insurers that target this size of account and ( 2) the fact that exposures are down considerably. As exposures decrease, so does premium. In order to hit budget projections, some insurers are choosing to get more competitive on new business opportunities with accounts they
By Industry Class Manufacturing .................. Down 5% Contracting....................... Down 5% Service............................... Down 5% Habitational ...................... Down 3% Public Entity ..................... Down 4% Transportation................... Down 2% Energy............................... Down 3%
About MarketScout The barometer is compiled by MarketScout, a Dallas-based electronic insurance exchange which underwrites and distributes hundreds of product lines to its over 35,000-member agency network across the United States. Over 50 “A” rated carriers participate in the MarketScout exchange platform at www.marketscout.com.
10 MARCH 11, 2010 • THE INSURANCE RECORD
References:
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