April 9, 2009 by Canadian Underwriter
MarketScout’s insurance ‘Market Barometer’ still shows a soft commercial market in March 2009, but rate decreases in the U.S. commercial property and casualty sector are starting to moderate.
MarketScout’s composite property and casualty rate index reflects an ongoing moderation in price decreases, with an overall rate reduction of 7% for March 2009. This is in contrast with overall rate decreases of 12% in both 2007 and 2008.
“The trend towards rate moderation is continuing,” MarketScout founder and CEO Richard Kerr said in a press release.
“Underwriters received a better net rate for each risk they wrote in March but their gross premiums probably decreased due to the impact of the current recession on almost all types of exposures, such as payrolls, gross receipts and property values. The moderation in rate reductions will yield more premiums but declining exposures will more than offset the improved rate.”
MarketScout is described as an “exchange.” Licensed insurance agents in the United States use MarketScout to access insurance companies that have been pre-qualified as
“Best of Class” for offering competitive quotes in hundreds of different industries or coverage classifications.
MarketScout cautioned that attempting to make up for premium reductions driven by the economic downturn “by simply writing more business is dangerous.”
It observed the market remains soft, even though price reductions are more moderate, and thus writing new accounts to offset the loss of income from a reduced premium base may actually have a negative impact on the bottom line.
“2009 is a time to carefully protect the balance sheet and to wait to make an aggressive move when rates are actually headed up, which should be early 2010,” MarketScout says.