Posted on 09 Nov 2010
In October 2010, the composite rate for property and casualty rates in the United States was minus 4 percent extending the slow and steady moderation trend that began in August 2009. For the last 14 months rate reductions have been very tight, measuring from minus 5 percent to minus 3 percent.
Richard Kerr, Founder and CEO of MarketScout commented, "We may be at the beginning stages of the 'new normal'. Since February 2005, rates have been cut in all areas regardless of how the data is measured. It doesn't matter if you measure by line of coverage, industry group or the size of account.
insureds have enjoyed a rate reduction every month with the exception of a month here and there for D&O coverage. Agents, brokers and insurers need to realize this pricing environment may be around for several more years."
Kerr also said, "A major catastrophe in excess of $100 billion could impact the market. Another factor that could ultimately increase rates is the lack of return capital providers have seen in their U.S. insurance portfolios. Also, investments in some startup companies have not gone as well as expected. As a result, fewer capital providers are willing to back startup insurers. Less capital for startup insurers could impact the market and ultimately support rate
increases as the supply channel constricts. Absent a major catastrophe or reduction in capacity, the current rating environment may be the new normal."
The National Alliance for Insurance Education and Research conducted pricing surveys used in MarketScout's analysis of market conditions. These surveys help to further corroborate MarketScout's actual findings, which are mathematically driven by new and renewal placements across the United States.