Commercial Brokers, Buyers Cite Market Softening

Both risk managers and commercial brokers report further softening across the insurance market for the third quarter of 2004. The RIMS/Advisen Benchmark Survey of North American risk managers finds softening across many lines of business on third quarter renewals, with property, excess and fiduciary liability dropping 2-3%, and general liability and directors’ and officers dropping less than 1%. This was also the second straight quarter where more polices received decreases than received increases.

The one sore spot remains workers’ compensation, where premiums rose more than 1.5% during the quarter. And pricing declines are not excessive in any of the segments, adds David Bradford, editor-in-chief at Advisen. “The key questions remain: will premium rates get much lower? And how long will the soft market last beyond 2004?” he says.

The average premium decline on commercial insurance accounts in the third quarter of 2004 was almost 6%, according to the latest quarterly market index from the U.S. Council of Insurance Agents and Brokers (CIAB).

Overall, premiums for large accounts dropped an average of 8.3% during the quarter ending September 30, with medium account decreases an average 6.4% and 3.1% for small accounts.

“Price competition has definitely returned to the marketplace, although more so for new business than renewal business,” says CIAB president Ken A. Crerar. “But,” he adds, “terms and conditions are still tight. Underwriters appear to be more willing to negotiate on price than on coverage.”