Insurance Blog

Excess capacity chasing market share kept commercial property/casualty rates down in the second quarter of 2010, according to the latest Commercial P/C Market Index survey from the Council of Insurance Agents & Brokers (CIAB).
Renewal rates on average dropped by about 6 percent in the second quarter, the CIAB said, compared to a 5 percent decrease in the first quarter. Council President Ken Crerar observed:
It’s like someone forgot to turn off the spigot. No one seems to know when the reservoir will dry up, but in the meantime, it’s definitely a buyers’ market.”

Commercial renewal pricing for small, medium and large business accounts continued to decline in the second quarter. Large account rate declines were again slightly more than the other accounts, but pricing for all account sizes was soft, according to the Council’s survey data.
All individual commercial lines included in the survey experienced rate decreases, compared with the previous quarter.
Brokers across the country reported […]

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The fact that property/casualty insurers recovered more quickly and completely than virtually any other segment of the financial industry is concrete proof that subjecting insurers to bank-style regulation would constitute a significant policy error, according to I.I.I. president Dr. Robert Hartwig.
Such a move would needlessly raise insurance costs for hundreds of millions of insurance consumers and would unfairly require insurers to subsidize the reckless lending practices and speculative activities of failed banks, he added.
Commenting on the industry’s first quarter 2010 financial results, Dr. Hartwig said the rebound in the industry’s claims paying capacity (otherwise known as policyholder surplus) was perhaps the most extraordinary sign of the P/C industry’s resilience over the past year.
Dr. Hartwig noted that policyholders’ surplus increased by $29.2 billion, or 5.7 percent, to $540.7 billion during the quarter, up from $511.5 billion at the end of 2009, although after adjusting for a unique transaction the figure stands at […]

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The fact that property/casualty insurers recovered more quickly and completely than virtually any other segment of the financial industry is concrete proof that subjecting insurers to bank-style regulation would constitute a significant policy error, according to I.I.I. president Dr. Robert Hartwig.
Such a move would needlessly raise insurance costs for hundreds of millions of insurance consumers and would unfairly require insurers to subsidize the reckless lending practices and speculative activities of failed banks, he added.
Commenting on the industry’s first quarter 2010 financial results, Dr. Hartwig said the rebound in the industry’s claims paying capacity (otherwise known as policyholder surplus) was perhaps the most extraordinary sign of the P/C industry’s resilience over the past year.
Dr. Hartwig noted that policyholders’ surplus increased by $29.2 billion, or 5.7 percent, to $540.7 billion during the quarter, up from $511.5 billion at the end of 2009, although after adjusting for a unique transaction the figure stands at […]

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A fragile global economy, excess capacity in virtually every line of commercial insurance and a quiet 2009 catastrophe year combined to keep commercial insurance prices flat during the first quarter of 2010, according to Towers Watson’s most recent Commercial Lines Insurance Pricing Survey (CLIPS).
The latest results mark the fifth consecutive quarter of little or no price increases after nearly five years of steady decreases.
Data for most lines indicate flat or small increases in prices, offset by price reductions in commercial property, directors and officers liability (D&O), and employment practices liability (EPL), according to Towers Watson.
Looking at D&O, it observed that price increases seen in the past year due to the financial crisis have disappeared, and pricing seems to be reverting back to pre-crisis levels.
CLIPS preliminary findings also indicate that accident year to date 2010 loss ratios deteriorated 5 percent relative to year to date 2009. Early estimates of claim costs […]

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Energy industries, along with transportation and habitation industries, had the least premium reductions at minus two percent in May 2010, according to the latest market barometer from online insurance exchange MarketScout.
Just last month MarketScout CEO Richard Kerr warned that energy rates would increase, especially for offshore accounts in the wake of the explosion, fire and sinking of the Deepwater Horizon oil rig.
MarketScout’s latest analysis reveals that the premium and corresponding rates for all lines of commercial property and casualty business in the United States were down three percent in May 2010, compared to minus four percent in April and a six percent rate decrease a year ago.
Not since June 2005 has the average property/casualty rate decrease been as low as 3 percent.
Crime (flat), EPLI, fiduciary and surety (down 1 percent) were the coverage classes experiencing the smallest decreases in May, while general liability experienced the largest rate decrease at 5 […]

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Energy rates are going to increase, especially for offshore accounts in the wake of the explosion, fire and sinking of the Deepwater Horizon oil rig in the Gulf of Mexico. In its latest analysis of market conditions online insurance exchange MarketScout says the oil spill disaster is huge and will have an immediate impact on all offshore energy placements. Onshore insureds with offshore exposures may also be impacted. Richard Kerr, CEO of MarketScout observed:
British Petroleum is largely self-insured; however, energy underwriters across the globe will participate in this loss via either excess placement insurance on the non-operators (investors), drilling contractor or blowout prevention manufacturer. The non-operators, Anadarko and Matsui Oil, have extensive insurance placements, as does the drilling contractor, Transocean. It may take years to calculate the total insured loss from this disaster but premiums will increase immediately for offshore energy accounts.”

The comments came as MarketScout reported the premium and […]

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Fierce competition, abundant capacity and diminished demand continue to suppress commercial property/casualty rates, according to two market surveys. The First Quarter RIMS Benchmark Survey found that the soft market (now in its seventh year) shows few signs of loosening its grip on commercial insurance pricing, benefiting risk managers with lower premiums. Average premiums in every line tracked by the survey fell in the first quarter of 2010, though forecasts for an above-average hurricane season may signal rising premiums on the horizon. Meanwhile, the latest quarterly Commercial P/C Market Index Survey from the Council of Insurance Agents and Brokers (CIAB) reported that rates on average declined by 5.3 percent in the first quarter compared with a 5.6 percent decrease in the fourth quarter of 2009. Council President Ken Crerar noted: “Until demand picks up we don’t see any significant uptick in commercial rates for the foreseeable future.”  Seventy-three percent of the brokers […]

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There are many factors that insurers need to consider when deciding whether to do business or continue to do business in a particular state. A state’s economic condition, legal environment, population growth, and potential untapped markets are just some of the things to consider. A new report from Conning & Co makes the case that personal lines (auto and homeowners) insurers now more than ever need to analyze the key variables between states that affect their potential to make a profit and grow. In Anticipating State Variations in Personal Lines Performance Conning notes that state level factors are always an important part of performance planning in the property/casualty industry, but are increasingly critical in the near-term economic climate. It explains that while the recession has had profoundly different effects on different states, it is very likely the economic recovery will as well. “Exposure growth, pricing, regulatory activity and other key […]

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Despite some bumps, rating trends for property/casualty insurers are stable, according to A.M. Best. In its 2009 Rating Trend Review, A.M. Best says that while the industry’s results are likely to be pressured in 2010, rating actions are not expected to move profoundly in one direction and the number of upgrades/positive outlooks and downgrades/negative outlooks will be fairly balanced over the next year. The comments came as the number of downgrades of Best’s insurer financial strength ratings in 2009 outpaced upgrades for the first time since 2005 even as key financial measures across the p/c industry improved. Downgrades of p/c insurers totaled 68 in 2009, up from 57 in 2008 and the highest total since 2005 when 76 downgrades occurred among p/c insurers, while upgrades totaled 59, the same as in 2008. However, nearly 20 percent of all downgrades in 2009 were within one organization and its group of companies. “Although […]

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Solid evidence of a substantial and sustained rebound in profitability for property/casualty insurers in the wake of the financial crisis that began in mid-2007 has emerged in the first nine month 2009 results just released by ISO and the Property Casualty Insurers Association of America. The industry reported an annualized statutory rate of return on average surplus of 4.5 percent through the first nine months of 2009, up sharply from negative 1.2 percent during the same period in 2008. In his commentary on the results, I.I.I. president Dr. Robert Hartwig noted that as recently as the first quarter of 2009 the industry recorded a negative rate of return. Moreover, stable investment market conditions and modest catastrophe losses since the end of the third quarter through late December guarantee that full-year profitability in 2009 will be much higher than the 0.5 percent return recorded in 2008. In another sign of recovery […]

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