The overall health of the insurance marketplace appears to be stable, but pricing is expected to continue its decline through 2007 except for some catastrophe-exposed areas, Marsh brokerage announced.

In its U.S. Insurance Market Report released yesterday, the New York-based insurance broker said the 2006 results, which recorded a combined ratio of 92.4, according to Insurance Services Office, and net income of $63.7 billion, were the result of years of rising rates and a bottom-line strengthening effort.

Marsh is a subsidiary of Marsh & McLennan services firm.

Estimates for 2007 show continued decline except in "a few noteworthy geographic areas with substantial catastrophe exposure," said Marsh.

The greatest uncertainty, the report continued, is the number of catastrophes the industry will encounter through 2007.

"The landscape of the industry is going to be determined by the extent to which insurers hold underwriting discipline in the wake of high capacity and declining rates," the report said.

According to the firm's own benchmark figures, rate change at renewal in the fourth quarter of 2006 saw noncatastrophe prices ranging from a decrease of 15 percent to an increase of 5 percent.

Moderate catastrophe-exposed risks increased 10-to-30 percent or more depending on location, risk profile and loss experience. Large catastrophe risks increased more than 30 percent, Marsh found

The noncatastrophe market is more flexible and competitive than it has been for years, Marsh said, but there is evidence of stabilization.

Insurers are maintaining underwriting discipline but are competitive on price, the report noted. The competitiveness is expected to continue through this year.

In the area of workers' compensation, Marsh said there are 702 bills in state legislatures as of March this year that could affect plans. The bills range from minimal changes to major overhauls. The report also notes that while claims frequency has declined, costs are escalating.

Special Reports /

Underwriters Still Disciplined As Rates Drop: Marsh

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