Soft Market Continues With One Exception

Online insurance exchange MarketScout says coastal property rates in select geographic locations are firming, bucking the trend of ongoing rate reductions in the property/casualty market. The comments came as MarketScout reported the average property/casualty rate decrease was 5 percent in February, compared to 8 percent a year ago. “While property rates were down 5 percent on a national basis, rates for wind capacity in the Gulf Coast, Florida and the East Coast up to and including North Carolina are moderating or increasing,† said Richard Kerr, CEO of MarketScout. Kerr went on to note that admitted insurers in some coastal states are restricted from raising rates beyond a certain point and that some of these insurers are choosing to reduce their exposure because they cannot achieve rate adequacy. In addition, several large non-admitted insurers who traditionally offer coastal property capacity are simply choosing to sit on the sideline as they wait for rates to increase. Meanwhile, rumors persist there will be two new entrants in the coastal property market before July 2010 according to MarketScout. However, this new capacity will not result in rate reductions because these insurers are entering the market at a time where they hope to catch rates on the upswing. “It’s a pretty good bet coastal property rates are going to increase soon,† Kerr added. By the way, business interruption, D&O liability, EPLI, fiduciary and crime were the coverage classes experiencing the smallest decreases in February with an average rate reduction of 1 percent. Commercial property, general liability and workers’ compensation experienced the largest rate decreases at 5 percent. Check out I.I.I. info on the property/casualty insurance cycle  and catastrophes and insurance issues.

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