Rate Moderation Is Slow But Steady

July 2009
MarketScout, the Dallas, Texas based insurance exchange, reports that rate declines for US property and casualty insurance placements continue to moderate at a slow but steady pace. The composite rate index for June 2009 was minus 6% compared to minus 11% for June 2008. According to Richard Kerr, CEO of MarketScout, “June renewals show rate declines that continue to moderate with many insurers waiting to determine how the July 1 reinsurance renewals will impact capacity. According to early reports, capacity for coastal property decreased and property catastrophe capacity in general is going to be tougher to secure. Berkshire Hathaway’s decision to curtail property catastrophe capacity has some speculating whether Berkshire is trying to avoid losses and the resulting pressure on their balance sheet or simply limiting capacity anticipating higher rates. Smart insurers are retaining their capacity until sensible risk return ratios are available. Poor underwriting results are pending for some major insurers. Expect significant market movement in the next twelve months with clear winners and losers.”

MarketScout calculates the US P&C market condition by analyzing data amalgamated at its insurance exchange (www.marketscout.com) and via in person surveys conducted by The National Alliance for Insurance Education and Research.
By coverage class, all classes either remained the same or moderated further with the exception of Workers’ Compensation, which changed from an average rate reduction of minus 7% in May to minus 8% for June. By industry class, Contractors were the only class of business that experienced further rate reductions as compared to the preceding month. By account size, small accounts moderated the most at an average rate reduction of minus 4%.

A summary of rates for each coverage and industry class as well as by account size for June 2009 is set forth below.

MarketScout

The barometer is compiled by MarketScout, a Dallas, Texas based electronic insurance exchange which underwrites and distributes hundreds of product lines to its over 35,000-member agency network across the United States. Over 50 "A" rated carriers participate in the MarketScout exchange platform at www.marketscout.com.