Are Prices Hard, Soft? It's All Interpretation

The Council of Insurance Agents & Brokers findings followed the earlier Risk and Insurance Management Society "RIMS Benchmark Survey" that said first-quarter prices in general-liability and commercial-property lines revealed signs of firming when compared to rate falls seen over the last several quarters.

According to the CIAB survey, commercial p-c premiums continued to soften during the 2005 first quarter, with the average rates for "all sizes of accounts" reaching the lowest levels since the market peaked in the 2001 fourth quarter. CIAB represents commercial insurance brokers who collectively write more than 80 percent of all commercial p-c premiums.

The CIAB said for all sizes of accounts, premiums declined an average of 9.4 percent in the first quarter, and 80 percent of large commercial accounts saw rates fall more than 10 percent, some down as much as 20 percent. The survey found that "virtually all lines of commercial p-c insurance" experienced a similar downtick.

A scattering of commercial lines?such as broker errors-and-omissions, workers' compensation, construction and medical malpractice?experienced a slight price rise of 1-10 percent. But even those accounts more often had stable or slightly lower rates, CIAB said.

Commenting on the CIAB findings, David Bradford, editor-in-chief of Advisen, which produced the RIMS Benchmark Survey, said CIAB appears to be showing somewhat larger rate falls in general than what RIMS found. But, he added, "I think what we are talking here is a matter of degree in interpretation of numbers and trends rather than any material differences."

He told National Underwriter that in particular, "what we are seeing with the RIMS survey is what appears to be a slowing down of the downward trend in prices in property and general liability." He explained that the reason for this finding's added significance is that "property and general liability have been the lines that typically lead other lines up and down in the marketplace" in terms of pricing trends.

"So to the extent that we are now seeing some moderations in those lines, we think that's a sign that the same moderation trend will spread throughout the rest of the commercial marketplace," Mr. Bradford said.