Economists may be declaring the end of a recession, but the resultant damage to the economy could mean commercial property and casualty rates won't rise until 2011, according to an Advisen briefing.
“The recession may have ended, but recovery has not yet begun in any meaningful way,” said Dave Bradford, an Advisen executive vice president and the author of the briefing, Planning for 2010: The Recession Will Keep Commercial Insurance Premiums Under Pressure. “Because of the economic slowdown, there is less to insure, and written premiums are taking a beating as a result.
"Factor in soft market pricing and 2010 looks like it will be another tough year for carriers and brokers.”
Average premiums have been falling steadily since 2004 in some lines of insurance, a result of a global glut of insurance capacity, Advisen says.
Rate levels in lines such as general liability and commercial directors & officers’ liability (D&O) are expected to erode further before reaching the bottom of the pricing cycle.
The average general liability premium has surrendered all the gains of the 2001-03 hard market, and is now at 2000 level, the briefing adds.
“We had expected to see rate levels begin to creep up in 2010, but the continuing impact of the recession means that meaningful rate increases are now unlikely until at least 2011,” said Bradford. “Certain narrow market segments such as financial institution D&O have seen premiums rise, but most of the commercial insurance marketplace is mired in the soft market, and is likely to remain there through 2010.”