May 1, 2004 by Canadian Underwriter
Commercial insurance buyers report falling rates in property and general liability lines, signaling signs of a softening market, according to the first-quarter 2004 edition of the “Risk and Insurance Management Society (RIMS)/Advisen Benchmark Survey”. Property rates fell by 1.5%, RIMS members say, while general liability dropped 1.4% in the first quarter. While the decreases in rates are slight, they represent the first time two major lines have declined in the last four years. Property insurance had already seen an 8.8% decrease in the last quarter of 2003.
Slowing price increases in troubled lines were seen in the first part of 2004, including employment practices liability, crime, and even directors’ and officers’ (D&O) coverage, where increases were less than 5%. However, risk managers question the length and intensity of the coming soft market. “The question right now is not whether the market is softening, but instead how long will it stay this way. We wonder if insurers will be able to take a protracted hit on prices in the current economic climate,” says David Bradford, chief knowledge officer at Advisen.