According to Richard Kerr, CEO of MarketScout, “Insurance executives are forecasting and closely monitoring the prospects for much needed rate increases in 2009. However; the most daunting challenge may be the economy. While rate adequacy is challenge enough, the health of the U.S. and world economy is playing a large role in the fortunes of insurance companies and brokers. Lower payrolls and receipts are resulting in lower premiums and severe pressure on expense rates. Insurers and brokers are faced with diminished premium bases before they even consider the terms of renewal or rates. If your exposure base is down 20% and you renew 90% of your customers you only capture a true premium renewal rate of 72%. The resulting lower retention puts incredible pressure on new business initiatives in order to maintain premium volume; all while insureds are trying to save even greater amounts of money across the board. The result: more insureds will take bids in 2009 and insurance companies will be forced to participate in the process. While we expect upward movement in prices, we don’t expect dramatic swings in the near term”.
For detailed information on the decline in rates by line, go to: http://www.marketscout.com/frontend/barometer2.asp.