Composite Rate Decrease Coming Very Soon
MarketScout expects large p-c accounts and D&O to see the biggest cuts in 2005
The year 2004 will be remembered as the beginning of a soft market, according to MarketScout.com, an online property-casualty insurance exchange.
The Dallas-based MarketScout reports that calendar year 2004 ended with an average 2 percent increase in composite p-c premiums. Last January, the year began with increases averaging 11 percenta major decline from the 27 percent reported in January 2003. As 2004 progressed, the average increase slipped to 7 percent in June and progressively adjusted downward to the 2 percent average rate increase reported for December.
"We anticipate continued rate declines in most lines of coverage throughout 2005," according to Richard Kerr, chairman and chief executive officer of MarketScout. "Large property and casualty accounts will experience the greatest overall rate decreases. Directors and officers pricing will decrease as wellmostly because the price went up so dramatically in 2002 and 2003, not because underwriters feel the risk of writing D&O has lessened."
He added that pricing for auto liability, employment practices policies, fiduciary and surety coverages "should continue to be fairly stable," but "as for all the other p-c coverages, the price is going down."
Looking at pricing trends over the past three years, "the 20 percent 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."
MarketScount noted that the National Alliance for Insurance Education and Research in Austin, Texas (administrator of the CIC, CRM and CISR designations) "conducts independent market surveys from a cross-section of participants in its continuing education programs. This information is used to further validate the composite numbers set forth in the Market Barometer."
Reproduced from National Underwriter Edition, January 20, 2005. Copyright 2005 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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