In its annual “Marketplace Realities” report, broker Willis finds despite price softening in “virtually all market segments”, underwriting discipline remains intact. Despite the past year being marked by catastrophes, including the Atlantic hurricane season and December 26 Asian tsunami, market capacity has not been significantly impaired, the report notes. And “unlike previous turns in the market cycle, this one has been marked by continued underwriting discipline in the treatment of terms and conditions, deductibles and retentions, catastrophe risk exposures, interdependencies and corporate governance”. Willis North America CEO Mario Vitale writes about the importance of transparency in 2005 as a key to maintaining consumer confidence: “Certain practices that had become part of the architecture of the industry have been challenged, with issues of equity, transparency and consumer interests coming squarely to the forefront. For insurance carriers and capital providers of every stripe, how they address customer expectations will determine their individual and collective roles and fortunes in the business of risk transfer and related services.” Continued price reductions are expected in the property line, on the order of 10%, although the current high deductibles and strict terms and conditions are “wild cards”. On the casualty side, new capacity on the part of new and existing players is leading to price declines of 10%-15% in primary layers for good clients. Workers’ compensation remains volatile despite the entrance of new carriers, and in most cases coverages which used to the “thrown in” to umbrella policies must now be purchased separately, such as professional liability, product recall and errors & omissions. The full “Marketplace Realities and Risk Management Solutions 2005” can be accessed at www.willis.com/Extras/Publications.aspx.