No sign of robust commercial market on the horizon

The grim results of 2008 are not enough to usher in a robust hard commercial market, according to Joel Baker, president and CEO of MSA Research Inc.
In the MSA/Baron Outlook Report: Q4-2008, Baker outlines the reasons for his assessment.
“Unlike personal writers, there are wide variations in results across the commercial writer spectrum with some companies continuing to enjoy (or at least appearing to enjoy) strong underwriting results,” he wrote.
“The lack of uniform misery means that while some players desperately need to raise rates, competition is keeping a lid on hardening.”
Baker also cited:
•    competition from multi-line insurers seeking relief from Ontario auto etc;
•    aggressive battles for turf by some players; and
•    recessionary pressures that limit buyer ability to absorb significant rate increases.
The 2008 combined ratio for commercial writers climbed 11.2 points in 2008 to 94.9%, he noted. With prior period reserve releases stripped out, the AY-2008 COR for commercial writers hit 102%, Baker added.
“Particularly hard hit was the boiler and machinery line which saw its 2008 net loss ratio sky rocket to 84.4%,” he wrote. “This is due largely to high losses in the B&M line for FM Global, the largest writer of this line in Canada.”