Survey: Underwriting Restraint Ebbing Quickly

According to the survey respondents, even medical malpractice premiums were starting to stabilize, and some carriers are not always requesting loss runs in order to quote new business.

CIAB said one broker from the Midwest, when asked for general market observations, commented, "There is no underwriting."

The Council reported that while most agents and brokers did not go that far in describing the market, they did report a definite lowering of rates, with insurers offering better and broader terms and lower deductibles for almost all classes of commercial p-c coverage.

An exception to the general market pricing trend, the survey found, was coastal property, particularly Florida accounts, where wind coverage capacity remained scarce and costly as has been the case since the fall of 2005.

The online poll had 113 respondents. Cheryl Arvidson, a spokesperson for the Council said they survey has "no accuracy quotient, it's a snapshot. We don't bill it as statistically significant."

Earthquake and other coverages for catastrophe-exposed property also were expensive and hard to find, respondents said.

An analysis of The Council's survey data by Lehman brothers showed an average fourth-quarter rate decline of 9.6 percent for commercial p-c accounts of all sizes with an average decline of 12.1 percent for large accounts and 6.3 percent for small accounts.

Both large and small categories hit their lowest rate levels since the Council surveys began in 1999, Lehman's analysis showed.

Rates for midsized accounts reached their low point during the second quarter 2005. The highest premium increases came during the fourth quarter of 2001, right after the Sept. 11, 2001 terrorist attacks.

Eighty-six percent of brokers responding to the survey said premiums for their small accounts held steady or declined during the fourth quarter 2006 compared with the previous quarter; and the majority-48 percent – reported a drop of 1 to 10 percent.

For medium and large accounts, the brokers said more than 80 percent of their account renewals experienced premiums drops of 1 to 20 percent.

The Council said, in addition to the general market softening in virtually all classes of commercial property-casualty accounts, it appeared that the standard markets are making room for some accounts that previously were handled as surplus lines

"Risks are beginning to come out of the surplus lines markets and back into the standard market. We haven't seen this since 9/11," a broker from the Southwest responded.

Renewing carriers, according to a Southeast broker, are still trying to keep premiums level or higher.

"However, the marketplace is demanding pricing to be lower to avoid losing new business to carriers who come in quite a bit lower-sometimes as much as 40 percent lower depending on the desirability of the account," he said.

The Council quoted an agent from the Northeast as saying, "Less restrictive 'Tell me what you need' is the story on most p-c clients."

It reported that brokers from the Midwest said regional carriers are being particularly aggressive.

Although wind coverage is still hard to find and expensive for coastal property, be it in Florida or Cape Cod, some of the respondents indicated the worst may be over.

"Coastal wind remains difficult, but there are some rays of light. A few carriers are coming in and under-cutting the market with 'lower' premiums than the rest of the marketplace," reported one broker.

The complete survey results can be viewed at www.ciab.com/marketsurveyQ406