January 24, 2005 by Canadian Underwriter
U.S. commercial insurance accounts saw significant rate softening in the last months of 2004, according to the latest quarterly survey by the Council of Insurance Agents & Brokers (CIAB).
In the fourth quarter, more than 80% of small and large accounts, and 90% of medium accounts saw their rates either hold firm or decline, brokers say. And the declines were as steep as 20%, they add.
The average decline on small accounts was about 4%, while the average price drop for medium accounts was 7%. Large accounts saw the biggest rate cuts, at an average 10%.
Brokers say the best deals were found on new business, while insurers tended to hold the line on renewals.
The greatest drop was in commercial property, but declines were seen across lines, brokers report. While some lines broker errors and omissions, commercial auto, workers’ compensation and construction saw increases, they were generally below 10%.
The one trouble spot on the horizon is residential construction. The lack of availability is so worrisome, one broker reports: “”Carriers continue to retreat from residential construction exposures. This looks like a crisis in the making.”
One broker linked the problem to class action lawsuits being brought by groups of neighbors in community developments or condominiums for construction defect.