Despite catastrophe losses, soft pricing continues in commercial insurance market, buyers report

Although property and general liability insurance rates increased in the first quarter of 2006, all indications point to a continuing soft commercial insurance market, according to the Risk and Insurance Management Society Bench-mark Survey. The survey, conducted by Advisen Ltd., analyzes current policy renewal prices
as reported by corporate risk managers.

In keeping with the soft market conditions evidenced in the past six quarters, directors and officers premiums dropped 3.5 percent in the first quarter of 2006 and workers’ compensation rates declined just more than 3 percent.

The property/casualty insurance industry overall turned a profit in 2005, according to survey officials, despite ever-dropping prices and a projected $58 billion in hurricane losses. That could suggest that competition among carriers is providing for a continuing soft market.

The effect of last fall’s hurricane season was still evident in property premium renewals as 70 percent of survey respondents reported higher premiums. Average rates rose by nearly 7 percent in the first quarter of this year, although Advisen analysts suggested the market buoyancy was due more to underwriter support than to underlying market conditions. Property premiums increased in the fourth quarter of 2005 after having steadily declined since the third quarter of 2003.

General liability rates experienced an upward swing of 5.1 percent; previous quarter survey data showed steadily falling premiums since the fourth quarter of 2003. Advisen analysts believe that general liability premiums may have been temporarily pulled higher by the spike in property premium levels, but will return to the pervasive softening trend by next quarter.

Topics Trends Catastrophe Profit Loss Commercial Lines Business Insurance Pricing Trends Property Market