Property-casualty coverage rates are continuing a downward spiral as storms predicted for this hurricane season have failed to materialize, according to a new market report.
Dallas-based MarketScout, an online wholesale insurance marketplace, said its insurance industry monthly barometer found median rates continued to drop, recording an 8 percent dip for p-c placements.
MarketScout said the market softened even further in September, with the insurance industry anticipating a year in which it escapes any notable hurricane losses. Forecasters had initially predicted two or three hurricanes would hit the U.S. mainland, MarketScout noted.
The absence of storm activity will result in improved underwriting profits and create more competition, MarketScout said, adding that the anticipated profitability is already impacting overall rates.
"If 2006 closes out without a significant hurricane or other catastrophic event, this market will continue heading south," said Richard Kerr, MarketScout's chief executive officer, in a statement.
"Even the coastal property market will adjust a bit. Currently, there are few insurers with wind capacity in the Gulf Coast and lower Atlantic seaboard, but that will change if we close out 2006 without a significant wind event."
MarketScout reported that accounts over $250,000 softened considerably with rate decreases of 10-to-11 percent, compared with decreases of 8 percent in the prior month. Habitational accounts also experienced rate reductions.
Workers' compensation rates continued to soften as smaller regional carriers impacted the market by cutting rates of large carriers that picked up large blocks of business in the hard market.
The one sector bucking the trend was energy, where rates showed a 5 percent increase on the month.
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