Insurance News

Property insurance rates stabilize in 3rd quarter

Posted on: December 12, 2009

The hardening market property insurance buyers faced in the first half of 2009 eased considerably in the third quarter, according to a report from Chicago-based brokerage Aon Corp.

During the first half of the year, property insurance rates increased on average between 4% and 5%, and more than 20% in some cases, Aon said in its quarterly market overview. But in the third quarter, rates flattened to an average increase of 0.2%, due to light losses, strong profits for most property insurers, and a $463 billion increase in industry surplus by the end of the second quarter, the report said.

?The limited hard property market of 2009 is largely behind most insurance buyers for the foreseeable future,? Aon said in its report.

About 25% of property buyers increased their limits in the third quarter, compared with about 11% of buyers in the second quarter, indicating a competitive market, Aon said.

The broker forecasts stable property rates for the rest of the year and downward rate pressure in 2010.

For directors and officers liability insurance, the hardening market that financial institutions faced shows signs of easing, Aon said. In the third quarter, financial firms saw average D&O rate increases of 3.2%, the first time that figure has dropped into single digits in more than a year. The D&O liability market for nonfinancial firms remains soft, with average rate decreases of 4.9%, the report said. New D&O liability insurers?Berkeley Professional Liability, Everest Reinsurance and Endurance USA?have entered the market as insurers with financial troubles in 2008 have recovered.

?(The) marketplace for all other sectors continues to be extremely competitive, with rates trending down, ample capacity, and the broadest terms and conditions seen in years,? the report said.

Copyright © 2009 Crain Communications, Inc.

Casualty insurance buyers face a continued soft market with flat to single-digit rate decreases, Aon?s report said. On average, primary policies for workers compensation and general liability saw 2% decreases in the third quarter, compared with nearly 8% rate decreases in the third quarter of 2008. Automobile liability policies on average increased 0.05% in the third quarter of 2009, the report said.

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