There are small but significant gains to be made for insureds in the current London D&O market, according to the majority of underwriters surveyed in the Willis Index tracking this sector.
The Index for the second quarter of 2006 found that competition for business in the London market is being driven by a more than adequate supply of capacity and a willingness to negotiate on coverage not seen for some years. With many insurers having recently overhauled their wordings, and with others due to do the same, the buyer’s market looks set to continue into the third quarter.
The Willis Index – a quarterly survey of London market insurers – asks participants for their views on the underwriting market over the past three and for the next three months. There are four surveys in the series with each Index exploring a different coverage area.
All respondents agreed that primary premium rates had fallen in the preceding quarter, with 66 percent reporting decreases of 10 percent or less, and the remaining 34 percent noting larger reductions of up to 20 percent. Over the next three months the trend looks set to continue, with a massive 75 percent predicting reductions of up to 10 percent and only a few of the brave (8 percent) suggesting that rates could flatten out.
While the overwhelming majority of respondents noted reductions in excess layer pricing over the last three months, a small but noteworthy group of 8 percent suggested that rates actually remained static overall during this period, indicating that there could be more resistance to declining rates among excess insurers where competition has been the greatest. For the next three months this small group of respondents remains of the opinion that rates will be static. However, of the rest, 84 percent are agreed that reductions will be less than 10 percent.
The Willis Index polls non-U.S. insurance companies providing buyers of specific lines of coverage with an overview of the market reporting on relevant issues unique to their industry.
Source: Willis Group Holdings