CIAB Survey Sees No Hard Market On Horizon

NU Online News Service, July 22, 12:51 p.m. EDT

A quarterly survey of insurance brokers finds pricing continuing to be soft, but with results indicating less decline than in past quarters.

The economy remained at the top of the list of the most critical political issues facing the United States today, followed closely by health insurance reform, the Washington, D.C.-based Council of Insurance Agents & Brokers found in its latest quarterly commercial property and casualty market survey.

In a survey of 115 individual member brokers, representing the nation's largest insurance brokerage firms, CIAB found average rates continuing to decline.

"We saw no significant change in pricing trends from the first quarter to the second quarter," CIAB President Ken A. Crerar said in a statement. "If a hard market is coming, it's up the road a bit. The pricing appears to be more a result of the weak economy than capacity."

The survey found average rates at negative 4.9 percent, slightly improved from last quarter's negative 5.1 percent.

The survey's average rates dropped below double-digit decreases in the fourth quarter of last year, where they stood at negative 6.4 percent. This was a substantial change from negative 11 percent in third-quarter 2008.

The CIAB said some brokers believe underwriters are not aiming for a hard market and are reverting to 2008 underwriting practices--with fierce competition between carriers for new business.

The brokers said that while underwriters are undercutting one another in order to obtain new business, the insurers are focusing on trying to push increases on renewals. Some coverage problems are cropping up, primarily for catastrophe-prone property coverages.

Other brokers were pointing to problems in directors and officers and workers' compensation.

Broken down by size of account, small accounts saw more modest improvement in declines in the quarter, going from negative 3.3 percent in the first quarter of this year to negative 2.5 percent.

Medium and large accounts experienced slight deterioration. Medium-size accounts went from negative 5.6 percent in the first quarter to negative 5.7 percent.

Large account decreases went from negative 6.4 percent in the first quarter of this year to negative 6.7 percent.

The CIAB said when brokers were asked "if they saw any improvement in the market of the economy impacting their business in a positive way, 84 percent said no."