NU Online News Service, Aug. 5, 12:10 p.m. EDT
MarketScout says insurance premium rates are in their third month of moderation, indicating that a pricing "correction" is finally going on as some lines of business are showing price increases.
The Dallas-based electronic insurance exchange, in its monthly pricing barometer, says overall property and casualty rate decreases in July stood at 2 percent—the third month in a row in which rate decreases moved from a 5 percent decline and above.
MarketScout notes that in May average rate declines inched to 4 percent, then to 3 percent in June.
"After almost six years, a pattern of consistent moderation in insurance pricing has occurred," says MarketScout. "The trend toward rate moderation and in some categories, rate increases, further supports the position the market has bottomed out and is finally beginning a slow correction."
Richard Kerr, CEO of MarketScout, says in a statement: "While the composite property rate is down 2 percent, catastrophe-exposed property rates are up 3-4 percent. Because of losses already sustained by property reinsurers, the impact of the 2011 hurricane season could play huge in property rates for the next 12 months."
MarketScout says energy experienced the greatest adjustment, moderating from minus 5 percent to minus 3 percent.
Kerr notes that a large energy insurer posted "poor results" and that may be "reining in some of the more aggressive underwriters."
Underwriters are also keeping close tabs on managing general agents in this sector to ensure proper underwriting pricing is being followed.
Examining lines of business, workers' compensation, professional liability, directors and officers liability, crime and surety were all up 1-2 percent.
Commercial property, business interruption, inland marine, general liability, umbrella/excess and commercial were still on the decline, all showing between 1 percent and 3 percent rate decreases.
Business owners policy, employer practices liability insurance and fiduciary were all flat.
By account size, small accounts, of no more than $25,000 in premium, saw rate increases of 1 percent, while medium, large and jumbo accounts were down 2, 3 and 4 percent, respectively.
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