Composite rates for U.S. property and casualty insurance coverages fell 13 percent for May, according to an electronic insurance exchange.

That finding was reported in a barometer published by Dallas, Texas-based MarketScout, which underwrites and distributes hundreds of product lines to a 58,000-member U.S. agency network.

The firm found most lines of coverage experienced rate reductions, as did industry classes and accounts broken down by premium size.

MarketScout said the greatest percentage premium reductions were in property, general liability and umbrella liability--each reflecting reductions of 14 percent.

It said the line with the greatest overall drop from the previous period was directors and officers liability--reflecting a 12 percent reduction, as compared to a 1 percent reduction in May 2006.

"Obviously, D&O underwriters feel the worst has passed and are reducing prices accordingly," MarketScout commented.

"The market is more competitive than the pure mathematical rate reductions reflect," said MarketScout's founder and chief executive officer, Richard Kerr.

"Insurers are broadening coverage terms and conditions, thereby effectively creating greater net price reductions," he added. "Some large admitted carriers are broadening the class codes they write in traditional business owners programs."

As an example, he said auto repair shops used to be written by specialty markets because of the unique exposures involved.

"Now we see auto repair being written by some traditional BOP markets, with the same coverages as are extended to the rest of their BOP customers," he noted. "Effectively, this is a huge rating differential, and the auto repair shop secures coverage at a lesser premium and an increase in coverage terms and conditions."

The same is generally true, Mr. Kerr observed, "for any line of coverage which was previously written in the excess and surplus lines market, and is now being written by admitted insurers."

The results for May 2007, by coverage class, showed the following reductions:

o Commercial property, 14 percent.

o General liability, 14 percent.

o Umbrella/excess, 14 percent.

o Workers' compensation, 13 percent.

o D&O liability, 12 percent.

o Business interruption, 12 percent.

o Employment practices liability, 12 percent.

o Professional liability, 11 percent.

o Inland marine, 10 percent.

o Commercial auto, 9 percent.

o Fiduciary, 6 percent.

o Crime, 7 percent.

o Surety, 5 percent.

The barometer survey also found that when it comes to reductions by account size:

o Small accounts (up to $25,000) were down 11 percent.

o Medium-size accounts ($25,001 to $250,000) were down 12 percent.

o Large accounts ($250,000 to $1 million) dropped 14 percent.

o Jumbo accounts (over $1 million), fell 13 percent.

The decrease by industry class was as follows:

o Manufacturing, 13 percent.

o Contracting, 11 percent.

o Service, 13 percent.

o Habitational, 14 percent.

o Public entity, 12 percent.

o Transportation, 10 percent.

o Energy, 12 percent.

MarketScout said its barometer is supported by surveys conducted by the National Alliance for Insurance Education and Research, conducted during CIC and CRM institutes held across the United States in May 2007.

The MarketScout exchange platform is located at http://www.marketscout.com.

Special Reports /

A 13% P-C Rate Fall For May, Says MarketScout

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