Commercial insurance pricing declines 5.4% in fourth quarter

As commercial insurance pricing declined 5.4 per cent on average in the fourth quarter, the soft business insurance market has shown no signs of change.

According to the results of a recent survey conducted by the Council of Insurance Agents & Brokers, the recent fourth quarter declines come on top of a fall of 5.2 per cent in the third quarter.

Council president Ken A Crerar stated that the organisation did not see any strong resolve on the part of professional indemnity insurance providers to keep pricing from eroding last quarter.  Mr Crerar stated that while competition is still the name of the game, certain fundamentals just don’t seem to add up properly.

Professional liability insurance buyers still have ample opportunities to procure competitively priced coverage, Mr Crerar added.

The commercial market index issued by the CIAB stated that there was little change in pricing from the fourth quarter to the third quarter.  Rates of decline for commercial insurance renewal prices for SMEs and larger firms was relatively flat, it indicated.

The group did share some positive news however.  It said that the demand for insurance may be experiencing growth. At 47 per cent, nearly half of all those who participated in the survey stated that last year’s fourth quarter saw an increase in demand.  In comparison to the third quarter of 2010, only 34 per cent of respondents reported growth.  Fourth quarter 2009 had even less growth reported with only 24 per cent.

Industry experts agree that while pricing may remain soft, an increase in demand may indicate that there is more resilience in the market than previously thought.  Many insurers have instead adopted a quietly hopeful attitude in believing that the worst days of the global economic recession are behind us, which will lead to a slow but steady recovery.

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