Posted on 22 Apr 2010
Fierce competition among carriers held commercial property/casualty rates down in the first quarter of the year, according to The Council of Insurance Agents & Brokers' quarterly Commercial P/C Market Index Survey. Overall, rates on average declined by 5.3% in the first quarter compared with a 5.6% decrease in the 4th quarter of 2009.
"We don’t see much change from last quarter. Carriers are still competing ferociously for new business and that’s keeping rates soft. There was some wishful thinking on the carriers’ part to increase rates on renewal, but that didn’t stick if there was any competition for the business”, said Council President Ken A. Crerar. “Until demand picks up we don’t see any significant uptick in commercial rates for the foreseeable future,” Crerar noted.
Commercial pricing for small, medium and large business accounts continued to decline in the first quarter, with the largest decline in large accounts, according to The Council’s survey data. All individual commercial lines surveyed experienced rate decreases.
Brokers across the country reported a soft market in the first quarter.
“Price competition continues unabated, if not stronger in the first quarter. Seems that 2010 growth requirements are ‘kicking in’ with many underwriters,” a broker from the Southeast said.
A broker from the Pacific Northwest reported that “Carriers appear to be underwriting defensively.”
Still another said, “Rates still falling at light speed. Terms and conditions are easier than counting on a repeal of the Health Care Act.”
Some carriers tried to increase rates at renewal, but most were happy to keep renewals flat. Carriers continued to chase new business.
“Very aggressive for new business, but trying to be flat on renewals,” a broker from the Southwest responded.
In the Midwest, “[Carriers] are looking for 3-9% rate increases, but if competition – not likely to get it.”
Brokers in the Northeast had a similar experience. “[Carriers are] pricing new business more aggressively than renewals.”
The soft market also is taking a toll on the surplus market. Capacity is plentiful and carriers are looking for business wherever they can find it.
A wholesale broker said that “the standard market has raided some of our business segments.”
Another said that “more standard carriers are going aggressively after traditional E&S business.”
Customers are still not buying. Seventy-three percent of the brokers responding to the survey said they saw no increase in demand from last quarter.