The latest monthly "Market Barometer" survey found property-casualty rates on average plunging 15 percent in October, even as insurers are heading for an "historic" underwriting profit this year.
The report by Dallas-based MarketScout, the online insurance exchange, notes that the profits follow decades of sub-par performance by the industry.
MarketScout said, however, that the profits are driving the soft market, resulting in a composite property-casualty average rate change of minus-15 percent in October. Commercial property and general liability lines led rate reductions, at minus-16 percent and minus-17 percent, respectively.
By industry class, manufacturing and energy were found to be down the most at minus-16 percent.
Richard Kerr, MarketScout's chief executive officer, said in a statement that a very competitive market is expected "for the balance of 2007 and well into 2008."
"There is simply too much capacity chasing premium, and what is perceived as incredible opportunities for underwriting profits," he said. "The only thing that will turn this market in the next six months is a horrific catastrophe or some type of unknown legislative or legal action which profoundly impacts the insurance industry."
MarketScout said its findings are based on data from its exchange, supported by in-person surveys of retail agents, company personnel, wholesale brokers and managing general agents. The company underwrites and distributes hundreds of product lines to a 60,000-member U.S. agency network.
The rates for October 2007, broken down by coverage class, industry class and account size were as follows:
By coverage class:
o Commercial property--down 16 percent.
o Business interruption--down 16 percent.
o Inland marine--down 13 percent.
o General liability--down 17 percent.
o Umbrella/excess--down 16 percent.
o Commercial auto--down 9 percent.
o Workers' compensation--down 10 percent.
o Professional liability--down 16 percent.
o Directors and officers liability--down 16 percent.
o Employment practices liability--down 15 percent.
o Fiduciary liability--down 9 percent.
o Crime--down 9 percent.
o Surety--down 7 percent.
By account size:
o Small accounts (up to $25,000), down 14 percent.
o Medium accounts ($25,001-to-$250,000), down 15 percent.
o Large accounts ($250,000-to $1 million), down 16 percent.
o Jumbo accounts (over $1 million), down 15 percent.
By industry class:
o Manufacturing--down 16 percent.
o Contracting--down 13 percent.
o Services--down 15 percent.
o Habitational--down 14 percent.
o Public entity--down 15 percent.
o Transportation--down 12 percent.
o Energy--down 16 percent.
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