Soft Market Trend Continues
Even lines that were tougher to place in the first half of the year are getting more competitive, according to the respondents.
“After flattening for much of the sec-
ond half of 2009, we saw an uptick
in competitive pricing during the last
quarter, particularly in the casualty
lines.”
WASHINGTON—Commercial
property-casualty premium rates con-
tinued to fall in fourth quarter 2009
at about the same 6% rate as in the
third quarter, according to the quar-
terly survey from The Council of In-
surance Agents & Brokers.
Low demand continued to press rates downward as companies fought for new business, The Council stated.
“Tough competition for new business was the name of the game last quarter as carriers chased market share in a still weak economy. Added pressure came from clients putting the squeeze on carriers to get the best terms and rates,” said Ken A. Crerar, president of The Council. “We don’t expect to see pricing turn upward until demand picks up and capacity diminishes.” Overall, the rates for small, medium and large business accounts declined slightly less than rates in the third quarter, The Council’s survey data showed.
Brokers See Aggression Brokers across the country reported very aggressive underwriting by insurers. “Risk selection as well as pricing has deteriorated,” reported a broker from the Southeast.
Insurers were reported as competitive on risks in the Pacific Northwest as well. One broker said companies
“Tough competition
for new business was
the name of the game
last quarter as carriers
chased market share in
a still weak economy.
Added pressure came
from clients putting the
squeeze on carriers to get
the best terms and rates.”
Ken A. Crerar
were using “competitive pricing with available capacity.”
Comm’l Brokers Comment Commercial brokers also reported that insurers’ appetite for new business is strong in the face of weak demand.
“Carriers continue to push for flat re-
newals but will aggressively push for
new business.”
One broker said companies are “ex-
panding risk and industry appetites to
look at more business.”
“Catastrophe property rates have
dropped and terms loosened,
significantly.”
“WC [is] still a competitive mar-
ketplace. Unfortunately, exposure is
down and so are rates, which results in
premiums that are a fraction of previ-
ous years.”
Plenty of Capacity The survey respondents reported no problem with capacity, which appears to remain at ample levels.
“Too much capacity chasing too little business,” explained one respondent. “There are a number of new entrants into the market who seem to be focusing on market share over underwriting and pricing discipline.” Another said, “No lack of capacity other than occasional poor loss, catastrophic exposures.” “No significant capacity changes over the past three months,” said one broker.
And lastly, a compelling 74% of the brokers responding to the survey said that demand for insurance products did not improve in the fourth quarter.
A Northeast broker said carriers are
“more flexible on terms and conditions
— underwriting appetite expanding.”
Another said, “Terms and pricing are
still excellent — competitive market-
place is driving the rate down.”
Brokers in the Midwest saw much of
the same. “Carriers more amenable to
providing terms and conditions they
were reluctant to provide previously to
try to maintain rate levels.”
Another said, “New business is very
aggressive. Underwriters are trying to
hold the rate on renewals.”
Surplus Lines, Too The push for business is cutting into business that normally heads to the surplus lines market, a broker noted. “Carriers had a tremendous appetite for premium. Standard markets are snapping up surplus lines type accounts and providing broader terms at cheaper rates,” the broker stated.
In the region-specific data, respondents stated that small accounts are primarily seeing either premium decreases between 1% and 10% or no change at all.
More than half (55%) of medium accounts experienced decreases of 1% to 10%, while 23% of accounts saw decreases between 10% and 20%. Large accounts were similarly divided, with 50% having 1% to 10% decreases and 18% of accounts showing 10% to 20%.
THE INSURANCE RECORD • MARCH 11, 2010 5
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