MarketScout: Avg. P-C Rate Hike 2% In 2004

MarketScout: Avg. P-C Rate Hike 2% In 2004

NU Online News Service, Jan. 11, 4:04 p.m. EST?Calendar year 2004, with an average 2 percent increase in composite property-casualty premiums, will be remembered as the beginning of a soft market, according to the chief executive of an online insurance exchange.[@@]

"The 20-to-30 percent rate increases of 2002 and early 2003 are well behind us. We have not yet bounced below the composite level of zero-percent rate increases, but I am sure a barometer with a composite rate decrease is coming very soon," predicted Richard Kerr, chief executive officer of Dallas-based MarketScout.

Mr. Kerr noted that last year began with p-c rate increases averaging 11 percent in January. As the year progressed, the average increase slipped to 7 percent in June and progressively adjusted downward to the 2 percent average rate hike for December of 2004, bringing the overall 2004 p-c rate increase to just 2 percent.

MarketScout's Mr. Kerr said he anticipates rate declines in most lines of coverage throughout 2005.

Large p-c accounts will experience the greatest overall rate decreases in the New Year, Mr. Kerr predicted.

He said directors and officers liability pricing will fall as well?mostly because the price went up so dramatically in 2002 and 2003, not because underwriters feel the risk of writing D&O has lessened. He also forecast that pricing for auto liability, EPLI, fiduciary and surety coverages should continue to be fairly stable. As for all the other p-c coverages, the price is going down in 2005, Mr. Kerr said.