December 13, 2010 by Canadian Underwriter
An overcapitalized U.S. commercial insurance market and weak demand will continue to drive down rates in 2011, eliminating any chance of a market hardening, Advisen reported.
In its most report, The Insurance Market in 2011: The Lingering Effects of the Recession Fuel Competition, Advisen Ltd. said commercial lines property and casualty insurance companies have seen the pricing gains of the 2001-2003 hard market evaporate, but there are few signs rates will increase in 2011.
“After six years of falling rates, insurers are saying that they have had enough, that prices must rebound soon,” said Dave Bradford, Advisen executive vice president. “Prices in some lines are now at the lowest point they have been in over a decade, but the market is overcapitalized, and demand is weak. All indicators point to yet lower commercial lines insurance rates in 2011.”
Bradford noted surplus lines have seen an 11% decrease in premiums in 2010.
Once the market bottoms out by 2012, sharply increasing rates that characterized the 2001-2003 hard market are unlikely. Instead, suggested Advisen, rates are likely to subsequently rise slowly and erratically.