Brokers report price softening across commercial accounts

While commercial buyers were reporting price stabilization, brokers are reporting significant softening across accounts in the first quarter of 2005.The results of the Council of Insurance Agents and Brokers (CIAB) contrast with views expressed by risk managers in the RIMS/Advisen survey, with broker saying price decreases are the norm, while their buyers say many lines are stabilizing and even firming.Commercial brokers say 80% of large accounts saw decreases of 10% or more in early 2005, and premiums were stable to declining in eight of 10 product lines.On average, premiums for all accounts dropped 9.4%, according to brokers’ surveyed, with an average decline of 6% on small accounts, 10.9% for medium and 11.4% for large accounts.Lines which did not see a pricing break include broker errors and omissions (E&O), workers’ compensation, construction and medical malpractice, although increases were generally less than 10% and many accounts saw stable to slightly lower pricing.Brokers report increased willingness on the part of insurers to negotiate terms, conditions and deductibles in the effort to get new business, specifically on accounts with good loss experience or perceived lower exposure.This increased competition means buyers need to be more aware than ever of insurer financial stability, says Ken A. Crerar, president of the CIAB. “When carriers start competing for business based on who can offer the lowest premiums, issues such as solvency move to the forefront. Insurance is fundamentally based on a promise to pay, and if that promise cannot be honored, the best price may not be the best deal.”