NU Online News Service, July 12, 3:40 p.m. EDT

Premium pricing continued to show downward pressure for the first quarter of 2010 for commercial and large accounts, according to a report released by insurance broker Aon.

The Chicago-based insurance broker said that in three separate segments--property, casualty and directors and officers liability coverage--pricing was in decline for commercial and large account segments with little evidence of a turnaround anytime soon.

Aon's U.S. Quarterly Market Overview said for property risks, pricing was down more than 4 percent and downward pressure is expected to continue. Insureds' purchase of limits remained unchanged as did deductibles and retentions, and that buying pattern is not expected to change.

Capacity remains ample and could increase.

On the casualty side, pricing is decreasing in the low single digits and is expected to remain flat. However, carriers with difficult risks may pursue increases where they perceive limited competition.

Like property, insureds are maintaining limits and the vast majority have not changed deductible or retention levels.

Carriers are exerting some underwriting discipline when it comes to emerging risks, but coverage enhancements exist, Aon said.

Discussing directors and officers liability coverage, the report said rates were down an average of more than 15 percent in the first quarter and, like the other lines examined, insureds maintained limits.

Restrictions were placed around emerging risks, a practice that is expected to continue through this year.

Capacity rose close to 2 percent in the quarter and new entrants are expected, increasing capacity through the rest of the year.

Federal Securities Class Action suits were down 33 percent from the same period in 2009, with a total of 34 suits filed compared to 51 in 2009. That trend is expected to continue, Aon said.

"In the current pricing environment, there does not appear to be any real financial imperative for insureds to 'voluntarily' increase retentions," the report said. "Until the D&O market begins to tighten, we do not expect underwriters will have the leverage to increase retentions they deem inadequate. However, when the time does arrive, adjusting retention levels would offer insureds a mechanism to minimize price increases."

Special Reports /

Report Finds Rates For Large Accounts In Decline

Related Stories

Recommended For You