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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 in demand.

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.

Thanks to Our 2024 PIA Partners:
AFCO Bluefire Insurance CRC Group Gulf States Insurance Co.
LRA Workers' Comp National General, an Allstate company Stonetrust Insurance
Professional Insurance Agents of Louisiana
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