New MarketScout Barometer Finds Soft Market Continuing

NU Online News Service, Dec. 7, 11:06 a.m. EST

The average percentage of deline for property and casualty insurance rates remained unchanged on a month-to-month basis, according to online insurance exchange MarketScout.

The monthly barometer showed average p&c rates decreased 5 percent in November, matching last month's rate index.

Except for directors and officers liability, which was flat, all lines showed rate decreases, most unchanged on a month-to-month basis except for businessowners policy (BOP), employers practices liability insurance (EPLI), fiduciary, crime and surety.

Four of the five lines displayed continued moderation in their decreases.

Both EPLI and surety went from negative 3 percent in October to negative 2 percent in November. Fiduciary and crime went from negative 2 percent to negative 1 percent last month.

Only BOP bucked the trend, going from negative 3 percent in October to negative 4 percent last month.

By account size, both small accounts (negative 4 percent) and jumbo accounts (negative 5 percent) remained unchanged, while medium-size accounts drove slightly downward from negative 5 percent to negative 6 percent last month. Large accounts, on the other hand, went from negative 6 percent in October to negative 5 percent last month.

Dallas-based MarketScout said in a statement that there appear to be "serious" plans on the part of the largest insurance brokers to acquire small-to-midsize agencies and brokers to grow their middle-market business. It said these brokers could purchase 30-to-40 percent of the independent agent market in the next three-to-four years.

With these acquisitions, MarketScout reasons, the mega brokers "would be able to use their muscle to cut better deals for themselves and their clients. If the result is more commissions for the mega brokers and a better deal for the insureds, it's a win-win situation...for everyone but the insurers."

Such a scenario, MarketScout said, could help to prolong the soft market.

"No one knows how this will play out, but it is yet one more thing for middle-market insurance company executives to worry about," the exchange said.

The National Alliance for Insurance Education and Research conducted pricing surveys used in the analysis, MarketScout said.