CIAB Says Prices Drop By 6% For The Quarter
By Mark E. Ruquet
NU Online News Service, Oct. 22, 10:55 a.m. EDT?Insurance prices dropped a total of slightly less than six percent in the third quarter of this year, according to the Council of Insurance Agents & Brokers quarterly broker survey.[@@]
The Washington, D.C.-based broker association released its quarterly market survey of 113 brokers who said, generally, insurance premiums continue to see declines, but a few lines still see some general price increases.
"Price competition has definitely returned to the marketplace, although more so for new business than renewal business," said Ken A. Crerar, president of CIAB, in a statement.
"But terms and conditions are still tight. Underwriters appear to be more willing to negotiate on price than on coverage."
The CIAB said the average rate of decline for all size accounts dropped 5.9 percent, compared to 3.2 percent in the second quarter of this year.
For small accounts, identified as accounts with commissions and fees paying $25, 000 or less, premium prices fell 3.1 percent. For midsize accounts, with commission and fees between $25,000 and $100,000, the drop was 6.4 percent. For large accounts, with commission and fees of more than $100,000, premium prices dropped 8.3 percent.
By line, the brokers said broker errors and omissions insurance and medical malpractice coverage showed signs of continuing hard price levels, while construction risks showed some moderation.
In broker E&O, only four percent said they saw any decrease, and 21 percent of accounts saw no change. On the up side, 36 percent of accounts saw changes ranging from one to 20 percent, while four percent saw increases between 20 and 30 percent, and one percent saw increase of 30 percent or more.
Terrorism insurance saw 25 percent of accounts with decreases ranging from one to 40 percent, 25 percent of which were in the one to 20 percent range. No change was recorded for 53 percent of accounts, and nine percent of accounts saw increases of one to 30 percent, seven percent of which were in the one to 10 percent range.
Medical malpractice prices remained hard on average with a 6.2 percent increase, the lowest increase in the history of the survey which goes back to the fourth quarter of 1999.
According to the CIAB, brokers said that some isolated trouble spots remain in construction risks, workers' compensation and medical malpractice.
The number one concern for brokers, the association said, was the return of price competition and the potential implications on insurer solvency. Tort reform was second, followed by an act of terrorism in the U.S. and natural catastrophes.
The survey covered pricing over the past three months from July through September.
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