CIAB Survey Sees Rates Bottoming Out

Commercial property-casualty insurance rate decreases showed definite signs of leveling off in the fourth quarter of 2008, according to the Council of Insurance Agents & Brokers' Commercial P/C Market Index Survey.

The survey found that result for small, medium and large accounts and for most major lines of commercial business.

CIAB President Ken A. Crerar said, “We see evidence in the fourth quarter that premium rates eased as insurers tried to hold the line on pricing. It's still a competitive market, but we think this may signal the bottom of the soft market, following six years of steady decline.”

“We will see if this trend continues in the first quarter of 2009 as price increases in the reinsurance market begin to trickle down and as the full impact of the economy and market conditions comes home to roost on insurers' bottom line,” he added.

During the fourth quarter, 43 percent of the agents and brokers responding to the survey reported that premiums for small accounts were down 1-to-10 percent, with 35 percent reporting no change in premiums compared with the third quarter.

For medium accounts, 50 percent said premiums were down 1-to-10 percent, while 17 percent saw decreases in the 10-to-20 percent range. Eighteen percent said there was no change in rates compared to the last quarter.

Premiums for large accounts saw more slippage, but not as much as the third quarter. Forty-one percent of respondents said rates declined 1-to-10 percent. Twenty-one brokers said rates dropped 10-to-20 percent, and 17 reported no change in rates since the third quarter.

Directors and officers liability premiums saw the most upward movement with 17 percent of respondents reporting a 1-to-10 percent increase for the line, while 36 percent reported no change and 21 percent said rates declined 10-to-20 percent.

An analysis of the CIAB's survey findings by Barclays Capital Equity Research said premiums for the average commercial account declined 6.4 percent during the fourth quarter. For large accounts, the rates were down 8 percent; for medium accounts, renewal premiums were down 7.1 percent compared with the third quarter; and for small accounts, the renewal premiums averaged a 4.2 percent decline.