November 6, 2003 by Canadian Underwriter
Rate increases in the U.S. commercial property and casualty insurance marketplace appear to have peaked in July of this year with average cover renewal pricing of about 13%, according to market analysis conducted by the Insurance Services Office (ISO). Subsequently, rates have been on a “downward slide ever since”, the ISO’s president Frank Coyne told attendees at the recently held ISOTech conference.
Against this backdrop of price easing, Coyne cautions insurers against making the same mistakes of the past by chasing marketshare at the cost of sound underwriting. “With each improvement in profitability, the property and casualty [insurance] industry has a history of reverting to hyper competition for marketshareInsurers have paid dearly for failing to adhere to disciplined underwriting and cost-based pricing,” he adds.
As such, Coyne observes that, “the firming in insurance markets that benefited results through six months [of this year] is in danger of becoming a thing of the past”. The ISO expects U.S. insurers’ combined ratio for 2004 to be around 101%, reflecting a 15 percentage point improvement on 2001’s disastrous ratio of 115.9%. However, the organization also predicts that premium growth will slow to about 6% for next year compared with the 14.3% gain made in 2002.