Flattening of commercial lines in 2010 Q4 a lull, not signal of hard market: RIMS

Commercial property and casualty insurance rates were flat in 2010 Q4 when compared to the same period of 2009, but a hardening of the commercial P&C insurance market is not imminent, Advisen reported in the Risk and Insurance Management Society (RIMS)’s 2010 Q4 Benchmark Survey.

Average renewal premiums for commercial lines property and casualty insurance were largely unchanged during 2010 Q4, except for directors and officers (D&O) liability. The D&O market was the only line tracked by the survey that experienced a material decrease, falling almost 5% compared to the same period of 2009, a RIMS release says.

“After seven years of falling premiums, I am sure underwriters welcome signs that the soft market will eventually bottom out,” said Dave Bradford, Advisen’s executive vice president and the editor-in-chief of the survey.

“The fourth quarter, however, was probably a temporary lull rather than the harbinger of higher rates anytime soon. The market remains significantly overcapitalized and demand for insurance capacity is weak as an outcome of the Great Recession.”

Robert Cartwright, Bridgestone Americas Holding Inc.’s loss prevention manager and a member of the RIMS board of directors, said more carriers appear to be exercising underwriting discipline and walking away from business that does not meet pricing targets, but it is still very much a buyer’s market.

“Premiums have stabilized a bit over the past couple of quarters, but they are still far below 2003-04 levels,” Cartwright said. “In some lines, they are back to where they were during the soft market of the 1990s.”