Commercial soft market finally bottoms out, but still no sign of hard market

A lack of substantive change in average renewal premiums in 2011 Q2 for three or four lines may indicate the soft commercial lines insurance market has finally bottomed out, according to the Risk and Insurance Management Society (RIMS) Benchmark Survey.
The survey, administered by Advisen Ltd., tracks changes in policy renewals as reported by risk managers.
General liability, property and workers’ compensation all fell by less than 1% on average, while directors and officers’ liability policies renewed by 4.5% lower, RIMS reported.
“Pricing has been fairly stable in three of the last four quarters, but it is too early to declare the soft market over,” said Dave Bradford, Advisen’s executive vice president and editor-in-chief.
“Rates may have stabilized for now, but barring major catastrophe loses, there are few signs of materially higher premiums on the horizon.
“The commercial property and casualty insurance market remains well capitalized, and the current sluggish economy could make it difficult for underwriters to push through rate increases.”
Record tornado losses in the United States, losses from the Japanese earthquake and tsunami, floods in Australia and earthquakes in New Zealand battered insurers’ results through the first half of 2011, but the impact has not been sufficient to trigger widespread premium increases outside some of the affected areas, the RIMS release says.
Additional catastrophes could spark higher rates for property and possibly other lines of insurance.