Soft P&C market to continue in U.S., survey says

Even though property and general liability insurance rates increased in the first quarter of 2006, all indications point to a continuing soft commercial insurance market according to the RIMS Benchmark Survey, a comprehensive survey of current policy renewal prices as reported by corporate risk managers.In keeping with soft market conditions that have prevailed over the past six quarters, directors and officer (D&O) premiums dropped between 3% and 4% in the first quarter of 2006. Overall, the property and casualty insurance industry turned a profit in 2005 despite ever-dropping prices and a projected US$58 billion in hurricane losses, survey officials noted.Competition among carriers would provide for a continuing soft market, the survey results suggested.”The enduring effect of last fall’s hurricane season was still evident in property premium renewals, as 70% of survey respondents reported higher premiums,” Advisen, the survey’s administrator, reported in a press release. “Average rates rose by nearly 7% in the first quarter of this year, though Advisen analysts suggested the market buoyancy was due more to underwriter support than to underlying market conditions.Property premiums increased in the fourth quarter of 2005 after having steadily declined since the third quarter of 2003.”The insurance market understandably appears a little unsettled by the massive hurricane losses of 2005,” Karen Beier a member of the RIMS board of directors, notes of the survey results. “However, risk managers may experience further softening in the casualty market. Barring more major catastrophes, premiums should fall further this year.”