Commercial market in distress, say U.S. agents

The dire condition facing commercial buyers is evidenced in the Commercial Insurance Market Index for the first quarter 2002, say the index’s creators, U.S.-based Council of Insurance Agents and Brokers (CIAB).
The index shows that market tightening continues since the September 11 terrorist attacks, with commercial buyers facing rate hikes, higher deductibles, lower coverage limits and reduced capacity on various lines of business. Not only is terrorism insurance affected, but insurers are also reducing their exposure to such threats as mold, asbestos, and natural perils including earthquake.
Most premium increases for the first quarter were in the 10-30% range, “but for some business types, premiums were two to three times higher if coverage could be found at all”, the index shows.
Particularly hard hit are the construction, manufacturing and transportation sectors, while brokers report difficulty finding coverage for nursing homes and hospitals, tradespeople involved in residential construction, and obtaining commercial auto, marine, aviation, trucking and cargo coverage, as well as medical malpractice insurance.
“Over the last three months, we have moved beyond initial difficulty with high-profile or high-exposure properties to an environment where the broader marketplace is affected,” says CIAB president Ken Crerar.
The survey also shows that commercial buyers are continuing to seek out alternative markets and risk transfer mechanisms, such as captives, in the face of price increases. Other buyers are choosing to take higher deductibles or even “go bare” and purchase no coverage.
“Unquestionably, the overall news for consumers is not good,” Crerar notes.
The CIAB says the survey also shows the need for government intervention in terrorism coverage.