Despite an environment of economic turmoil, a dismal housing market, payroll and sales reductions, and declining rates, most Florida general liability (GL) carriers continue to battle for market share. With markets generally open and competitive for this line of business, pricing remains soft. However, while double-digit rate decreases were common during 2009 and early 2010, that deep pricing trend appears to be moderating, with rate decreases closer to five percent more the norm today. Carrier balance sheet pressure is building as financial results in the second and third quarters deteriorate, perhaps bringing the soft market closer to an end.

Even with very positive overall P&C results in the first quarter of 2010, results for the balance of the year are likely to deteriorate. The industry's positive first quarter net income was largely driven by a significant improvement in investment results, not underwriting results. It is unlikely that this level of investment gain will be repeated in subsequent quarters as the impact of catastrophe losses (2010 hurricane season forecasts remain gloomy) and the Deepwater Horizon disaster are more fully realized. As capacity is absorbed, pricing for all lines of insurance likely will be impacted.

Notwithstanding this highly competitive and generally open market, a few classes of business do face a more restrictive GL market, including contractors involved in residential multi-unit housing, new ventures, financially distressed businesses, and contractors having exposure to tainted Chinese drywall.