Property rates expected to 'hold steady,' at least duringhurricane season

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The composite rate for property-casualty business shows anaverage reduction of 5 percent last month, compared to a 3 percentdrop in June, according to MarketScout.com, an electronic insuranceexchange.

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“Rates for almost all lines of coverage are heading south, withthe exception of habitational, corporate D&O, coastal propertyand offshore energy accounts,” noted the Dallas-based firm.

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“Since we are in the middle of hurricane season, property rateswill hold steady,” predicted Richard Kerr, chairman and CEO ofMarketScout.

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“If underwriters do not suffer significant deterioration intheir book of business by November 2005, property rates will beginto decrease,” he added, noting that large losses from hurricanesand other cataclysmic events have less of an impact on“technologically-savvy underwriters.”

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“Today, most insurers utilize some type of geo-coding program tomonitor their overall book of business,” he said. “This softwarecan track a myriad of exposures as related to an insurer's book ofbusiness, thereby notifying the insurer when they exceedpre-selected maximum desired exposures in a particular geographiclocation.”

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Mr. Kerr also noted that offshore energy underwriters are“nervous about the increase in hurricane activity in the Gulf ofMexico. Smart buyers are maintaining as much coverage as possiblebecause, as of late, it's money in the bank. Renewals on offshoreenergy risks are up as much as 15 percent.”

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He predicted that “underwriters will relax their tough positionif the 2005 hurricane season is not too difficult.”

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The barometer is based on MarketScout's own findings, supportedby surveys conducted by The National Alliance for Education andResearch.

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Callout:

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D&O, coastal property and offshore energy accounts are onlylines that beat the trend.

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