Commercial insurance market conditions remain soft

In a new report recently published by one business insurance broker, the current soft conditions of the commercial insurance market throughout the European, Middle Eastern, and African regions will most likely persist through the current year.

Business liability insurance broker Marsh stated that many of the key drivers of the professional indemnity insurance market of years’ past will continue to influence the marketplace going forward into 2011.  These market drivers included an abundance of capacity, the relatively low number of insured catastrophe losses, and the highly competitive nature of the business insurance market.

Bruce Trigg, risk management practice head for continental Europe, the Middle East, and Africa for Marsh, stated that market conditions for commercial insurance purchasers in 2010 were favourable for the most part despite an economic environment that many saw as a challenging one.

Mr Trigg added that Marsh expected that market conditions will remain positive in general for those interested in purchasing commercial insurance cover.  Those firms with limited exposures to catastrophes and favourable loss histories will be able to obtain the most attractive deals, as will those who can supply high-quality data to insurers and brokers, the management practice head concluded.

Unfortunately not all news is good news.  The implementation of the Solvency II regulatory requirements in Euro Zone countries is thought of as one factors that may influence rates.  The cost of compliance with the new regulations may lead to underwriters making adjustments to take into account the added costs of compliance with the so-called ‘Basel for insurers’ regulatory scheme.

The new regulations are based on economic principles in regards to the measurement of assets and liabilities. The risk-based system will measure principles on a consistent basis, which will lead to capital requirements having a direct dependency on it.  Solvency II is scheduled for a January 2013 start date.

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