U.S. soft market persists, but premium decreases are slowing down: RIMS survey

Soft market conditions persisted in the United States during 2010 Q3, although the rate of the price decreases slowed, according to the RIMS Benchmark Survey.
Every line of insurance tracked by the Advisen-administered survey posted a decrease in average premium.
General liability insurance, however, posted only a nominal decrease compared to the rest of the lines, falling less than 1%.
Average D&O premium fell 4%, while property premium declined roughly 3% in 2010 Q3.
“Premiums didn’t fall much this past quarter, at least not in a couple of key lines, but the soft market is far from over,” says Dave Bradford, Advisen’s executive vice president and editor-in-chief of the survey.
“If insurers avoid large losses this hurricane season, which seems likely at this point, competition may pick up across all lines. There is still too much capacity chasing too little premium.”
Advisen predicted protracted soft market conditions in commercial lines, in part because of the lingering effects of the global recession.
Advisen observed a reduction in the amount of insurance premium in the market after the recession forced business to downsize or close shop. Insurance companies are therefore competing for their share of a shrinking market, the benchmark study notes.
As a result, although the recession might be over, written premiums remain depressed in many lines.
“Rates in some lines are back to where they were at the depths of the last soft market,” says Robert Cartwright, loss prevention manager for Bridgestone Americas Holding Inc. and a member of the RIMS board of directors.
“That might suggest that the market is poised for a turn, but competition is still intense. Barring a large catastrophe loss, insurance buyers should continue to enjoy favorable pricing for the foreseeable future.”