Insurance Market

Here is a good short article about insurance pricing from the Council of Insurance Agents and Brokers.  It is definitely a buyers market right now with pricing being driven down by fierce competition in the industry.  We are seeing unprecedented drops in premiums tied to increased coverage.  Because of this, I am careful to select 5-7 insurance markets for each of my accounts so I can find the best combination of coverage and pricing for my customers.  I can't guarantee that there isnt a lower price out there somewhere, because it would be impossible to cover every market.  However, I feel that I am doing my job by approaching a good number of companies for each account so we know that our pricing is competitive among the top insurers for each industry.  In this type of market, buyers have to be aware that there are insurance companies out there that are trying to buy business by offering extremely low rates.  Some of these companies are dangerous to do business with because they have likely cut out portions of coverage or they might be financially unstable and trying to collect whatever premium they can because they know there are people out there who will choose them solely based on price.  Sooner or later the market will turn and pricing will start to tighten up and maybe increase.  When that happens, you will find much more value in having a relationship with an insurance broker who understands the coverage forms and rates and can negotiate a good product.

COUNCIL SURVEY SHOWS COMMERCIAL PROPERTY/CASUALTY RATES
MELTING IN SUMMER HEAT WASHINGTON, D.C., July 19, 2010
"It’s the same old story," said Council President Ken A. Crerar. "Carriers continue to fight aggressively for new business as capacity flows into the market. It’s like someone forgot to turn off the spigot. No one seems to know when the reservoir will dry up, but in the meantime, it’s definitely a buyers’ market."
Commercial renewal pricing for small, medium and large business accounts continued to decline in the second quarter, compared with the first quarter of the year. Large account rate declines were again slightly more than the other accounts, but pricing for all account sizes was soft, according to The Council’s survey data. All individual commercial lines included in the survey experienced rate decreases, compared with the previous quarter. – Excess capacity chasing market share in the commercial property/casualty marketplace has resulted in another quarter of declining renewal pricing, according to The Council of Insurance Agents & Brokers’ second quarter Commercial P/C Market Index Survey. On average, renewal rates dropped by about 6 percent in the second quarter, compared with a 5 percent decrease in the first quarter of 2010.  Brokers across the country reported that capacity was plentiful for all lines:
"New carriers continue to enter the marketplace, further driving rates down. The capacity seems endless at this point."
"Carriers have lots of capacity for new business, but also don’t want to lose renewals. If there’s competition they will lower price."
"Appetite for premium is at a desperate level. New capacity continues to come into the market (inexplicably) and there is not enough premium to feed all the mouths."
"There is an abundance of capacity for D&O and other management liability coverage. Carriers are seeking to maintain market share by cutting premium and expanding coverage."
Buyers found good deals not only on pricing last quarter, but on terms and conditions as well, according to survey comments. "Carriers are open to improving deductibles, terms and conditions in hopes of being able to keep premium flat," said one respondent. Another broker saw "lower deductibles, broader coverage terms, more liberal terms." Still another remarked that there are "generally broader terms, no additional restrictions in coverage."
There was no notable change in customer demand for insurance in the second quarter, the brokers said. Only 26 percent of those surveyed said demand was up – about the same response as in the first quarter.
The economy and credit crisis remain the top concern of brokers across the country.