Hard market on the way, says Towers Perrin

The soft market is coming to an end, as the insurance industry has witnessed the smallest decline in U.S. commercial property and casualty insurance prices in four years, according to a Towers Perrin survey. Property and D&O liability prices rose slightly in 2009 Q1, as did accounts with annual premiums in excess of US$50,000, according to the Towers Perrin commercial lines insurance pricing and profitability trends survey (CLIPS). Small-account commercial prices continued their pattern of steady, but smaller decreases, Towers Perrin noted. There was no deepening of price reductions from 2008 Q4 in any of the lines surveyed, the survey found. In lines in which prices fell, all 2009 Q1 decreases were in the low single digits. “Premiums in many lines may be falling faster than prices in some segments of the market because lower payrolls, receipts, miles driven and other measures of exposures are declining due to the current economic climate,” said Stephen Lowe, managing director of Towers Perrin’s global property and casualty insurance consulting practice. “This reduced exposure from economic conditions may account for some of the disparity between the CLIPS survey results and the surveys published by the insurance brokers,” he added. “More qualitatively, anecdotal evidence indicates that property insurance prices are continuing to rise in catastrophe-prone areas and declining slightly in non-catastrophe areas,” Lowe said. “This trend reflects the continuing high cost of property catastrophe reinsurance.”