A new survey from Willis Group Holdings has found that “premiums across all financial, executive and professional lines of insurance are decreasing to the levels seen in 1999 and 2000 – the low point of the last soft market.”
The Willis Index comprises three quarterly surveys, conducted by Willis’ Financial Executive and Professional Risks (FINEX) division that ask participants for their views on the underwriting market over the past three months and their predictions for the next three months for Financial Institutions, Directors’ & Officers’ Liability and Professional Indemnity risks.
The Index “polls London-based insurance companies providing buyers of specific lines of coverage with an overview of the market reporting on relevant issues unique to their industry,” said Willis.
The Willis Financial Institutions Index for the third quarter suggests that the average premium discount was around 10 percent. Underwriters surveyed by Willis are predicting that this state of affairs will remain unchanged during the next quarter and possibly even beyond 2008.
Willis also noted that the “widespread flooding in England, the sub-prime crisis and resultant credit crunch have, so far, had little effect on rates in the FI insurance market.”
As afar as Directors’ and Officers’ (D&O) Liability Insurance is concerned Willis found that “over the last three months, 23 percent of insurers reported flat rated renewals; of those insurers reporting reductions there was an even balance between reductions of up to 10 percent and reductions of up to 20 percent, although in Willis’ second quarter survey the predictions had been skewed towards larger reductions of up to 20 percent. The majority of D&O insurers surveyed predicted smaller reductions of up to 10 percent in the fourth quarter of 2007.”
Turning to the Professional Indemnity (PI) Insurance sector, Willis indicated that there has been a “continuing reduction in rates across the entire PI arena.” Some insurers surveyed felt that rates could fall to similar lows as the 1999/2000 period, however, “this may not occur for some time. The Willis PI Index found that with the increasing market capacity available, insurance buyers can in some cases utilize premium reductions to purchase additional limits.”
Roland Avery, Chairman of FINEX, commented on the key findings of the Willis Financial, Executive and Professional Risks Index. “It was without doubt a buyer’s market for financial, executive and professional risks and the general consent is that it will continue through to 2008,” he indicated. “However, sub-prime and an economic slowdown have the potential to change the landscape dramatically and we will be keeping a close eye on the marketplace over the next quarter.”
Source: Willis – www.willis.com.