MarketScout.com, an Internet-based insurance distributor, said property-casualty premiums fell an average of 2 percent in May, identical to the rate of decline seen during the prior month of April.
The firm also noted an interesting development in the current soft market–the dearth of “rogue underwriters.”
Looking at price changes according to coverage lines, property rates remained flat in May, while workers’ compensation rates fell 1 percent and management liability dropped 4 percent. Casualty premium rates also declined, down 2 percent.
Taking account sizes into consideration, small accounts saw prices stay flat, while rates of medium-sized accounts went down 2 percent and large accounts dropped 6 percent.
In a commentary, Richard Kerr, chief executive of Dallas-based MarketScout.com, observed that in this soft market, prices could soften, “but at a very slow, measured pace…resulting in the elimination of wildly fluctuating premiums.”
Mr. Kerr cites the absence of “rogue underwriters”–insurers who would cut rates deeply as the soft cycle begins–as a cause for optimism.
Mr. Kerr said that in the “good old days” when the industry entered a softening market, “there were always seven or eight insurers who would blaze the trail by deeply discounting rates.”
These companies, Mr. Kerr said, were almost always staffed by a senior rogue underwriter who would try to make a name for themselves by becoming known as “the hottest hand.”
However, Mr. Kerr noted, “something very strange is happening in the soft market of 2005. There are very few rogue underwriters.” He conjectures that with the new requirements for fiscal responsibility and accountability, it just may be possible that the rogue underwriter has become extinct.
“That would be a positive move for the industry,” Mr. Kerr said.