“We really didn’t see any significant trend last quarter though rates appear to be edging towards positive territory,” said Ken A. Crerar, president of The Council. “There’s still plenty of capacity in the market to dampen prices.”
On average, pricing increased less than one percent in the third quarter, compared with an average -5.2 percent decline in the third quarter 2010. Workers’ compensation and commercial property realized modest gains over the third quarter with 4.1 and 3.0 percent increases, respectively.
Although competition is still stiff, brokers responding to the survey said that carriers got tougher on underwriting accounts, particularly those with poor loss experience. “Appetite to write accounts has diminished as a few carriers have stopped writing certain classes of business,” according to a broker from the Southeast region.
A broker from the Southwest region said underwriting is stricter and carriers paid “much closer attention to large property with more attention on retentions and reinsurance.”
Brokers in the Northeast reported similar developments. “The pricing for poorly performing accounts increased. The carriers were willing to let [an] account go rather than agree to a flat renewal,” one noted.
The survey also revealed some pressure on workers’ compensation and property lines.
A Northwest broker saw a “General pull back of underwriting appetite, specifically in workers’ compensation, property and environmental lines.”
In the Southeast, underwriting and pricing was stricter for workers’ compensation and property. “Property firmed on CAT exposure or poor loss experience accounts. Workers’ compensation also firmed.”
The story was similar in the Midwest. “Carriers reviewed their property lines closely – reduced some flood limits, and tried to increase base rates on workers’ compensation.”
Demand for insurance appears to be flat, according to the brokers surveyed. Thirty-nine percent, about the same number as last quarter, said demand has not picked-up. The economy and market competition are still keeping brokers awake at night.