Favorable Reinsurance Terms Drive July 3 Percent Rate Decrease

July property and casualty rates declined an average of 3 percent compared to last year at the same time due in part to favorable midyear reinsruance terms, according to MarketScout.

In its monthly rate barometer, MarketScout said rates are expected to be soft overall for the remainder of the year, barring a major catastrophic event.

Richard Kerr, founder and CEO of MarketScout, said, "Insurers received just what they needed to continue aggressive pricing for the balance of the year--favorable midyear reinsurance terms."

He added, "Rates will continue to moderate in select coverages or industries, but the composite rate will most likely continue to show a small reduction from the immediately preceding year."

MarketScout reported that general liability rates decreased more than all other coverage classes, at 5 percent. On the other end of the spectrum, rates for crime were flat. Commercial property and BOP decreased 4 percent each, and business interruption, inland marine, commercial auto and workers compensation all declined 3 percent. Umbrella/excess and fiduciary rates decreased 2 percent, while professional liability, directors and officers liabilty and surety all decreased 1 percent.

Larger accounts tended to have greater rate decreases, according to MarketScout, with Jumbo accounts (over $1 million in premium) and large accounts ($250,000 to $1 million) each declining 4 percent. Medium accounts declined 3 percent, while small accounts, with premiums up to $25,000, decreased 2 percent.

Rates for risks in the service industry were down 4 percent, while manufacturing, contracting and public entity risks were all down 3 percent. Habitational, transportation and energy risks all declined 2 percent.