Despite predictions last week by market "groundhogs" that premiums should climb modestly this year, commercial property-casualty prices continued to fall last month, with MarketScout's barometer showing a 6 percent average decline in January.
Indeed, while analysts queried for the Insurance Information Institute's annual "Groundhog Forecast" (see accompanying story) combined to predict 3.8 percent premium growth for the industry in 2006, the p-c market shows no signs of hardening right now, although some lines and industries reported price increases, according to MarketScout, an online insurance marketplace.
"After the worst insured hurricane season on record pummeled the industry with over $50 billion in losses, many of the insurance industries' well-respected analysts predicted a tightening market," noted Richard Kerr, chairman and chief executive officer of Dallas-based MarketScout.
However, he added, "our data simply never supported the return to a hard market. As of late January 2006, everyone has started to agree, barring an unusual event, a hard market is not going to happen–at least not in the first half of 2006."
MarketScout said the data showed little change in pricing between December 2005 and January, except for commercial property and business income accounts, which reported 3 percent and 2 percent increases, respectively.
General liability and workers' compensation led the downward trend–each down 8 percent–followed by professional liability with a 6 percent decline, and umbrella/excess, down 5 percent. Inland marine, commercial auto and fiduciary liability dropped 2 percent, while employers professional liability insurance was down 1 percent. Directors and officers liability, crime and surety premiums were flat.
Premiums were down across the board for all types of buyers, but the bigger the buyer, the deeper the discount. Jumbo accounts with premium over $1 million led the downward trend at 12 percent. Both medium-size accounts (premium from $25,000 to $250,000) and large accounts ($250,000 to $1 million) were down 7 percent. Small accounts with up to $25,000 in premium showed a 6 percent decline.
Some industry classes did see hikes, MarketScout noted, with energy showing significant increases of up to 10 percent. Public entity classes were up 4 percent, habitational accounts increased by 3 percent, and transportation was up 1 percent.
Other sectors reported price cuts, including the services industry (down 7 percent), manufacturing (down 5 percent) and contracting (down 3 percent).
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