Product lines and market segments experiencing the greatest reductions in pricing over the last few years—most notably workers’ compensation, property and large accounts— may have begun to stabilize, according to Towers Perrin. The firm’s most recent commercial lines insurance pricing and profitability trends survey indicates prices declined 3% during the fourth quarter of 2008 compared to the same quarter a year ago, representing the smallest reduction in the past eight quarters.

The pricing reductions in workers’ compensation, property and large accounts are now generally in line with activity in other commercial lines, with the exception of specialty lines, where, consistent with recent quarters, price changes remained fairly flat, Towers Perrin says.

“The underlying deterioration in underwriting results, coupled with unprecedented investment losses, are contributing to a slowing of pricing declines,” said Jeanne Hollister, Towers Perrin managing principal and property/casualty insurance practice leader for the Americas region. “Although the property/casualty industry remains strongly capitalized in the aggregate, we expect that the surplus declines in 2008 will result in increased conservatism in companies’ risk appetite. We believe that this, in turn, will lead to a gradual, general firming of prices throughout the balance of 2009.”

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