After recent reports of a grim outlook for insurers in 2010, Aon Corp. has some good news: property, casualty and directors' and officers' (D&O) liability insurance rates will continue to stabilize in 2010.
According to its “U.S. Q3 '09 Quarterly Market Overview,” Aon expects:
• Stable property rates through the remainder of 2009, as well as downward pressure in 2010
• A soft casualty market to continue into 2010
• A continued stabilization of D&O rates in the short term, with the exception of insureds who have elevated company-specific risks or who are in an industry facing challenges
After increasing property rates for the first two quarters of 2009, especially for natural catastrophe-exposed portfolios, property rates in the third quarter were generally flat. Property experience for most carriers in 2009 has largely been positive and surplus/supply remains strong and improving for the industry. For the remainder of 2009 and 2010, Aon expect rates to be stable with some downward pressure.
Average rate decreases remained in the low single digits through the third quarter for most casualty lines. The vast majority of insureds continued to purchase similar limits and maintained existing deductible/retention levels year over year. Barring any unforeseen events, the casualty market will continue to experience soft conditions, with the majority of insureds seeing flat to single-digit rate decreases, Aon says. Casualty carriers continue to be challenged to grow net written premium, and are aggressively seeking to acquire and retain insureds. As a result of heavy competition, coupled with a reduced exposure base, insureds are expected to experience lower premiums in 2010.
Overall, D&O rates decreased 2.7% in the third quarter. Furthermore, pressure eased for the Standard & Poor's financial institutions sector, which includes banks, diversified financials, insurance and real estate. After double-digit increases in each of the previous four quarters, pricing in that sector increased by only 3.2% in Q3 '09. All other S&P industry sectors were down an average of 4.9% in Q3 '09. D&O capacity has increased. Several new underwriters have entered the field and a number of carriers, previously weakened by the economy, have recovered, Aon says.
View Aon's Q3 '09 Quarterly Market Overview here.
Register or login for access to this item and much more
All Digital Insurance content is archived after seven days.
Community members receive:
- All recent and archived articles
- Conference offers and updates
- A full menu of enewsletter options
- Web seminars, white papers, ebooks
Already have an account? Log In
Don't have an account? Register for Free Unlimited Access