Data Points To Slower Pace For Rate Decreases In ‘08

U.S. property-casualty insurance rates are expected to decline through 2008, but not at the same pace they did in 2007, according to data released by MarketScout.

Dallas-based MarketScout, which has tracked the U.S. p-c market since 2001, reported that rates for May are down 11 percent, compared to a 13 percent reduction for the same period last year.

Richard Kerr, founder and chief executive officer of the online insurance exchange, said, “In the second half of 2007 rates declined an average of 14 percent. We don’t expect similar rate decreases in 2008. Rates will be down, but certainly not at the same pace as 2007.”

By coverage class, commercial property and general liability saw the largest decreases in May at 14 percent each. Professional liability and directors and officers liability were at the low end, dropping 6 percent each.

The manufacturing and service industries saw 12 percent decreases, while energy saw a 9 percent decrease. Contracting, habitational and transportation all saw 11 percent decreases, and public entity decreased by 10 percent.

The size of the accounts mattered little with respect to how much the rate dropped. MarketScout reported that jumbo and small accounts dropped 11 percent while large and medium sized accounts dropped 12 percent.

MarketScout said its Market Barometer uses internally gathered data plus in-person surveys. The findings are further supported by surveys conducted by The National Alliance for Insurance Education and Research.