P-C Rates Continue Decline

Property-casualty rates continue spiraling downward, showing a decline of 12 percent over the previous month, according to an online insurance wholesale exchange.

In its latest Market Barometer, Dallas-based MarketScout said on average March rates were down 12 percent with no lines of business showing any sign of upward momentum.

In a statement Richard Kerr, chief executive officer of MarketScout, said: “The softening of the market is due to seven drivers:

o Major insurance companies are reporting strong profits.

o Many admitted carriers are now writing business which was previously written in the nonadmitted market.

o There is an influx of new capacity via startup insurance companies.

o Florida has passed legislation which will result in billions of dollars of new property insurance capacity.

o The stock market remains strong.

o Corporate earnings are strong.

o There have been no major catastrophe losses in almost 18 months.

As a result, property and casualty rates are down 12 percent for March 2007.”

Of 13 coverage classes of business MarketScout broke down, general liability rates declined the most at 13 percent, closely followed by umbrella/excess and workers' compensation at 12 percent. Surety was down the least at 3 percent, with crime and fiduciary standing at negative-4 percent. The remainder ranged from negative-8 percent to negative-11 percent.

All size accounts showed downward trends. Small accounts were down 9 percent; medium accounts down 10 percent; large accounts down 12 percent; and jumbo accounts down 13 percent.

By industry class, manufacturing was down the most at 13 percent, while transportation saw the smallest decline at 8 percent.

The numbers reflects a steady falloff since the beginning of the year in rates, with February coming in at negative-10 percent and January standing at negative-9 percent, the third year of decline, MarketScout said.