Price declines for the property-casualty insurance market appear to be stabilizing, keeping about the same pace over the past two quarters, according to a poll of agents and brokers.
In its quarterly survey of 105 member brokers, the Council of Insurance Agents & Brokers found the amount and pace of price declines steadying.
"We think the survey generally reflects what is going on in the marketplace," Ken A. Crerar, president of the CIAB, said in a statement. "There is still plenty of capacity, but as industry analysts have noted recently, the economic woes, coupled with the soft market, are beginning to hit insurers' bottom line. Relatively mild hurricane seasons the last two years have helped the industry return to profitability, but the clock may be ticking on that front."
Seventy-six percent of those surveyed with small accounts of $25,000 or less in commission and fees said premium rates were down 1-to-20 percent, which compares to 78 percent from the previous quarter. Four percent of those surveyed said rates on small accounts dropped 20-to-30 percent, compared to 6 percent during the first quarter.
Comparing medium size accounts, with fees and commissions between $25,000 and $100,000, 77 percent said accounts were down 1-to-20 percent, while in the first quarter the number stood at 74 percent. Higher decreases on the accounts, in the range of 20-to-40 percent, were down from 20 percent of those surveyed in the first quarter to 14 percent of brokers or agents in the second quarter.
On the question of large accounts, those over $100,000 in commissions and fees, 57 percent of the brokers said decreases ranged in the 1-to-20 percent range. Thirty-one percent said decreases ranged from 20-to-40 percent. This compares to the first quarter of this year when 62 percent of large accounts experienced decreases in the range of 1-to-20 percent, and 30 percent said rates dropped 20-to-40 percent.
The CIAB said the findings were further backed up by an analysis by Lehman Brothers of the survey data that determined premium rates for all accounts in the second quarter dropped 12.9 percent compared to 13.5 percent in the first quarter of this year.
In a review of average rates for the past six quarters, declines for all accounts have ranged from 11.3 percent in the first quarter of 2007 to 13.5 percent a year later for the first quarter of 2008.
Large accounts are still seeing the sharpest declines at 14.8 percent during the second quarter, followed by midsize accounts at 14.1 percent. Small accounts experienced the smallest decline at 9.7 percent.
The survey highlighted five lines of business: commercial auto, workers' compensation, commercial property, general liability and umbrella.
Of the five, commercial auto seemed to be the least volatile with declines either a little above or below 11 percent over the past five quarters. For the second quarter of this year commercial auto's price decline stood at 11.6 percent.
The highest of the five was general liability with a 13 percent decrease, down 0.6 percent from the previous quarter's high of 13.6 percent.
Of the remaining three, umbrella had a second-quarter decrease of 11.9 percent, workers' comp stood at a 12.3 percent decline, and commercial property was down 12.6 percent.
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