P&C industry softens in second quarter (July 21, 2005)

The second quarter of 2005 continues to see a softening of the commercial p&c industry, according to the Commercial Property/Casualty Market Index sponsored by the Council of Insurance Agents and Brokers this is evidenced by an increase in competition for renewals among commercial insurance brokers.
The survey reports that small, medium and large accounts are seeing a drop in premium rates. Specifically, it shows that 49% of brokers have seen small accounts premiums drop 1-10% while 16% reported a 10-20% decrease. Comparatively, medium and large accounts have experienced dramatic decreases with 41% of medium accounts dropping 1-10% and 44% dropping 10-20%. Of the large accounts: 34 % are down 1-10%; 39 % are down 10-20 %; and, 12 % are down between 20-30%.
The Lehman Brothers analysis of the survey data showed that premiums for the average commercial account declined 9.7 % during the quarter. Furthermore, the average small commercial account experienced a 5.6% decrease in rates; the average mid-sized account premium was down 11.4%; and the average large account premium decreased by 12%.
This decrease in premium rates was also apparent across most commercial insurance lines in the second quarter, however brokers say the surety bonds as well as director’s and officer’s insurance, medical malpractice coverage and habitational risks such as residential construction are giving them difficulty.
Brokers from all regions report an increasing desire for new business, however not the most desirable financial figures from the first quarter are presently available to prompt carriers to aggressively seek market shares. However, brokers say regional markets are aggressive, especially on middle market business.
In addition, the survey reports a slight increase in terrorism insurance during the second quarter for medium and large accounts. Yet the total number of customers buying the insurance is still small.