The depth of reductions in U.S. property and casualty insurance rates, which had been slowing over the course of 2009, accelerated again last month, MarketScout reported.
"The October rate reversal does not bode well for those looking forward to the end of the soft market. But maybe October was an anomaly…Maybe," said Richard Kerr, chief executive officer of Dallas-based electronic insurance exchange MarketScout.
According to the firm's monthly "Market Barometer," the average rate decline for p&c coverages in October was 5 percent, compared to an average drop of 4 percent for September, breaking the "moderation trend," according to Mr. Kerr.
"The U.S. property and casualty market is still soft," he said. "However, rates had been progressively moderating for the last 21 months, trending from a reduction of minus-15 percent in January 2008 to minus-4 percent in September 2009. During this period there were no reversals in the composite rate."
He noted that "for 21 months, the Market Barometer has consistently measured rates either down, or at least flat on a month-to-month comparison As a result, insurance companies and intermediaries have been anxiously awaiting a month where we report the composite rate as zero, with most insurance policies renewing 'as expiring.'"
The Barometer survey found that general liability, property, inland marine, umbrella and employment practices liability rates were all down even more in October than in September. By industry class, manufacturing accounts experienced the most aggressive rate reductions, down 6 percent.
In other findings for coverage class, MarketScout said four segments declined by 5 percent–commercial property, inland marine, umbrella/excess and workers' compensation. Only one line, commercial auto, was down 4 percent.
Five lines were down 3 percent–business interruption, businessowners policies, professional liability, EPLI and surety.
By account size, those classed as small (up to $25,000 in premium) were down 4 percent. Medium accounts (from $25,000 to $250,000) were down 5 percent. Large accounts ($250,001 to $1 million) were down 6 percent. Jumbo accounts (over $1 million) were down 5 percent.
Among the industry class groupings, manufacturing was down 6 percent; contracting and service were down 5 percent; and habitational, public entity, transportation and energy were all down 4 percent.
MarketScout said the National Alliance for Insurance Education and Research conducted pricing surveys it used in its analysis of market conditions.
MarketScout said its exchange underwrites and distributes hundreds of product lines to an over-35,000-member agency network across the United States. Over 50 "A"-rated carriers participate in the MarketScout exchange platform at www.marketscout.com, the firm reported.
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