P&C Rate Cuts Keep Moderating

The soft market continued to bottom out last month, as property and casualty insurance rate declines averaged 4 percent, compared to 5 percent in August, according to the Market Barometer survey by MarketScout.

The Dallas-based electronic insurance exchange's monthly price check indicated that overall commercial insurance rates have moderated substantially from last year, as composite rates fell by an average of 10 percent for September 2008.

“Rates will continue to moderate for the balance of 2009,” predicted Richard Kerr, chief executive officer of MarketScout. “By early 2010, we anticipate most lines of coverage will be renewed as expiring or for a slight rate increase.”

By business class, general liability rates showed the biggest change, going from an average cut of 7 percent in August to a 5 percent drop in September.

Inland marine also showed a two-point swing, from a 5 percent drop in August to a 3 percent decline last month.

Workers' compensation was still the most competitive line, with rates down an average of 6 percent–although even that had moderated from a 7 percent average decline in August.

Commercial property remained unchanged, with rates down 4 percent, as did directors and officers liability (flat), crime (down 2 percent) and surety (down 3 percent).

Fiduciary was the only line to buck the moderation trend, going from a 2 percent drop in August to an average 3 percent cut in September.

Three of the four account-size segments remained unchanged on a month-to-month basis–with small accounts reporting rates down an average of 3 percent, medium-size accounts down 5 percent and large accounts seeing prices fall 6 percent.

Jumbo accounts experienced a one-point swing, going from an average rate cut of 5 percent in August, to a drop of 4 percent in September.