Stabilizing Signs

More signs of market stability are indicated in the latest commercial lines insurance pricing and profitability trends survey (CLIPS) from Towers Perrin. The survey found that commercial insurance prices declined just 3 percent during the fourth quarter of 2008 — their smallest reduction in the past eight quarters. According to Towers Perrin, product lines and market segments experiencing the greatest reductions in pricing over the last two years, such as workers compensation, property and large accounts, may have begun to stabilize. A press release cites Jeanne Hollister, Towers Perrin managing principal and property/casualty insurance practice leader for the Americas: “Although the property/casualty industry remains strongly capitalized in the aggregate, we expect that the surplus declines in 2008 will result in increased conservatism in companies’ risk appetite and that this, in turn, will cause general price firming to occur in 2009.† The survey comes just a week after online insurance exchange MarketScout reported an average property/casualty rate decrease of 8 percent in February 2009, compared to a double-digit rate decrease of 14 percent a year ago. Check out latest I.I.I. information on the industry’s financial outlook.  

One thought on “Stabilizing Signs”

  1. Interesting read regarding the stabilization of the insurance market and that the soft market is nearing the bottom. However, there are numerous recent lead stories of companies entering new sectors (e.g. life sciences, lawyers), lines of business (e.g. environmental, marine, energy, etc.) and several recent new entrants into the specialty E&S markets. I do not believe that in the next 6 to 9 months we will see much more than a slowing of the rate decreases especially for primary and excess general liability as well as E&O. In addition, I believe that barring a catastrophe (man made or natural) any hardening of the market will be tempered for reasons noted above.

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