More Rumblings of Potential Market Firming
In recent weeks, there has been an uptick in talk that, while the soft market
may not be turning, some faint signs of firming might be emerging. The latest
information nuggets come from a quarterly market survey by the Council of
Insurance Agents and Brokers (CIAB). It found that commercial insurance
prices decreased an average of 2.9 percent in the first quarter of 2011,
compared with a 5.4 percent decrease in the fourth quarter last year. In
addition, the survey also found more respondents reporting an increase
The survey says 57 percent of respondents saw an increase in demand compared
to 47 percent in the previous quarter's report. Commercial property and
workers. compensation had the greatest percentage of brokers saying they
have seen demand increases.
A decrease in the rate of softening does not constitute a hardening — not
yet, at least. But for agents awaiting a hard market, a move in the right
direction is encouraging. There are other rumblings being heard that can be
filed under, "things are still sliding, but not as fast."
Michael R. Murray, assistant vice president for financial analysis with the
Insurance Services Office (ISO) recently said that "prices [have] yet to firm
in many commercial insurance markets despite rising loss and loss adjustment
expenses." Then he added this: "But economic growth may also spur increases in
demand for insurance that absorb excess capacity faster than investment gains
create it. If it does, insurers can look forward to an end to the soft market,
accelerating premium growth, and improvement in underwriting results."
Last month, PIA national Director Stan Logan told the National Underwriter that
in commercial lines, "an increase in pricing is right around the corner."
But he sounded a cautionary note, as well. While insurers are beginning to
talk about rate increases, that doesn't appear to be happening widely, at least
at this exact moment, noting that "not everyone agrees with" his pricing optimism.
What It Means to Agents: The bottom line
seems to be that we are starting to hear scattered reports of some price firming
in commercial lines, along with a tightening of underwriting. Stay tuned.