Howard Ballast Insurance

The Council of Insurance Agents & Brokers (CIAB) survey of property and casualty insurance agents and brokers has released the findings for its latest survey which reveal that competition remains strong.

As one broker put it, conditions remain very competitive. He says that the affect of the subprime crisis together with the current natural catastrophes, has not yet triggered a need to return to a pricing discipline.

In the words of another broker, the insurance carriers have a willingness to write additional lines of coverage, examples being workers' compensation and umbrella coverage.

Another broker says that due to the degree of competition, even for tougher risks, premiums are still suppressed. According to him, there are only a few carriers that are willing and able to sit back and wait for the rates to increase.

Yet another broker speaks of some leveling of rates in the third quarter.

A broker from the Southwest says that the market is beginning to stabilize. He says that large accounts with outstanding loss histories and above average data can still receive reductions. However, he adds, for accounts that do not reflect the above category, underwriters are starting to ask for higher retentions and are not as willing to drop price as dramatically as previously.

It is also possible that the economic crisis may be driving more claims activity.

As one agent observed, on certain classes of business such as construction, the economy is causing more filing of claims. This is causing more negotiation on those accounts.

Brokers say that their top three industry concerns are price competition-excess capacity, competition between brokers, and insurer solvency. The top three political concerns were listed as the economy and credit crisis, foreign policy and the budget deficit.
Some of the survey’s respondents indicated that the latest government rescue of insurance giant AIG was bringing about new competition for commercial business. There was also a general accord that the disagreeable economic conditions and Wall Street meltdown that was seen at the end of the third quarter, has yet to affect the property and casualty insurance market.

A broker from the Northeast says that the conditions at this time still remain very competitive. He adds that the actual impact of the subprime crisis and natural catastrophes have not yet triggered a return to a pricing discipline.

One agent from the Midwest said that competition is continuing unabated, and that this is regardless of the credit crisis.
In general the results of the survey indicate that at this time premiums have yet to change significantly but that changes might be expected to occur in the near future. This is a subject that demands continued attention.