CIAB Survey Finds Soft Market Growing
NU Online News Service, Jan. 24, 4:19 p.m. EST?The Council of Insurance Agents & Brokers quarterly market survey shows an entrenched soft market during the last three months of 2004, with most accounts showing premium decreases of between one and 20 percent.[@@]
According to the quarterly survey of the nation's largest brokers, 54 percent of small accounts (defined as accounts with commissions and fees of less than $25,000) saw premium decreases of up to 20 percent, while 30 percent saw no change in premium.
With both medium-size accounts (accounts with commissions and fees of between $25,000 and $100,000) and large accounts (commissions and fees of more than $100,000), 78 percent saw a premium decrease of up to 20 percent. Six percent of large accounts experienced commission decreases of between 20 and 30 percent.
According to figures compiled by Lehman Brothers Equity Research for CIAB, the average rate of decline stood at seven percent in the fourth quarter.
However, there were still a number of lines exhibiting more moderation than softening. Among these were broker errors and omissions, construction risks, medical malpractice, and surety bonds.
Of the 140 brokers who responded to the survey, 20 percent saw no change in premiums for broker errors and omissions insurance premiums, while 28 percent reported increases of 20 percent or less. Only 6 percent said premiums were down 20 percent or less. The majority, 42 percent, said they either did not know or did not handle the line.
On construction risks, 32 percent saw no change, 22 percent saw increases of 30 percent or less, and 28 percent saw decreases of 20 percent or less.
For medical malpractice, 19 percent of brokers said premiums saw no change, while 18 percent witnessed increases of 30 percent or less, and 5 percent said premiums have gone down 10 percent or less. Fifty-five percent said they did not handle the account or did not know.
For the surety bonds line, 38 percent said there was no change, while only 10 percent saw increases of 20 percent of less, and 3 percent saw decreases of 10 percent.
CIAB said in the survey comments they received from brokers around the country, brokers said they are having difficulty finding carriers willing to place residential construction risks. Brokers also said companies are becoming more aggressive in seeking new business but are holding the line on renewals.
There were some reports of relaxed underwriting, but the trend was not widespread, the association noted.
Information on the report is available at www.ciab.com.
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