New York — A report from Advisen Ltd., a provider of information, analytics and technology to the commercial insurance industry, predicts that the commercial insurance premium market cycle is close to its bottom, and that general commercial insurance prices will begin increasing by the fourth quarter of 2009 or the first quarter of 2010. Advisen research is based on its own database of premium history and its database of the financial performance of 13 million companies.

“In years past, insurance companies recouped underwriting losses with investment income, but in 2008 the combination underwriting losses and material investment losses means a five-year soft market is coming to an end,” says David Bradford, Advisen EVP and chief knowledge officer. “The global recession may delay the return of hard market conditions by keeping demand for insurance down, but once the hard market sets in, it is likely to last longer than was the case in recent cycles.

“In previous hard markets, price increases attracted new capital investment to the market, and the increase in insurance supply led to short hard market cycles,” Bradford says. “In the current economic environment, where credit markets are essentially frozen, capital to create new insurance and reinsurance capacity may be in short supply. With capital scarce, the coming hard market could be longer in duration than those of the past several decades.”

The full report is available from Advisen, and covers the impact on pricing of many factors including the AIG crisis, the global economic crisis and how buyers of commercial insurance are reacting to the market changes.

Source: Business Wire

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