Woodruff Sawyer and Company. Insurance Services, Risk Management, Employee Benefits

Commercial Property and Casualty
Insurance Market Summary
October, 2010

  • Commercial Property and Casualty rates declined six percent on average in the second quarter of 2010 compared with about five percent in the first quarter of 2010, according to the Commercial Insurance Market Report of the Council of Insurance Agents & Brokers July 2010 Market Survey.

  • Underwriters are receptive to improving deductibles, terms and conditions in hopes of keeping premium levels flat. Few, if any, additional restrictions are being imposed on renewal programs and most are renewing with the same terms and conditions.

  • Rate reductions were achievable in nearly all lines of coverage, particularly for D&O and other management liability coverage lines.

  • Carriers have renewed capacity and an appetite for new business, although do not want to lose renewals – if there’s competition, most underwriters will lower premiums in order to maintain market share.

  • The weak economy continues to suppress insurance buyer’s demand for coverage and excess limits.

  • Large claims in the first six months of the year (Chilean earthquake, Deepwater Horizon oil spill and various weather related losses) have cut into insurer profits thus far in 2010. Insurer balance sheets remain adequate, however, and capacity might even increase further with new market entrants.

  • The primary General and Umbrella Liability market continues experiencing rate decreases with more than 70% experiencing up to 10% rate reductions (subject to minimum premiums, where applicable).

  • The commercial Property and Terrorism market also continues to soften as well with approximately two-thirds of renewals experiencing flat to 10% rate reductions.

  • Significant Workers Compensation rate increases are being proposed in certain states, most notably California at 27.7%. However, most carriers have been filing for moderate rate increases of 5%-8% primarily because of substantial resistance to any increases in the current economic environment. After applying credits, most renewals are flat or down 10% - and fewer than 10% are experiencing any rate increase (mostly due to loss experience). Like the rest of the P&C market, Workers Compensation throughout the US appears to be flattening as claims costs continue to increase along with insurance company combined ratios.

(Source: Council of Insurance Agents & Brokers Market Index Survey July, 2010, Barclays Capital Equity Research)