Council Says Markets Distressed

By Mark E. Ruquet

NU Online News Service, July 19, 12:38 p.m.EST?A national survey of insurance brokers has foundmarkets distressed as companies clamp down on underwriting andraise prices, leaving groups of clients to do without insurance insome lines.

The research by the Council of Insurance Agents and Brokers, forits quarterly "Commercial Insurance Market Index" survey,documented "the deep and deepening distress of the commercialinsurance market," the group said.

"Consumers, carriers and brokers alike are clearly on thecutting edge of pain now spreading to all segments of the U.S.economy," said Ken A. Crerar, CIAB's president in a statement.

Of the 136 broker members surveyed during the past three months,including July 1 renewals, 60 percent of respondents said premiumrates rose between 10 to 30 percent. Twenty-two percent said ratesrose between 30 to 50 percent.

Small firms, with commissions and fees of less than $25,000,reported the biggest jump, with 75 percent saying rates rose in the10 to 30 percent range and 7 percent seeing rate increases forclients of between 30 to 50 percent.

On the other end of the scale, 31 percent of large firms(commissions and fees of more than $100,000) said rates were upbetween 30 to 50 percent and 42 percent said rates rose between 10to 30 percent.

In individual lines, business interruption, commercial auto andgeneral liability were reported up between 10 and 30 percent bymore than 65 percent of those surveyed.

More dramatic increases were seen in areas such as medicalmalpractice, where 22 percent of those surveyed said increasesranged between 50 to 100 percent and 18 percent said increases wereat more than 100 percent. Forty-two percent said they did nothandle the line. The CIAB said brokers are reporting more and morephysicians are finding they must join state assigned risk pools ordo without insurance due to increased rates and strictunderwriting.

Other notable increases were in construction risk, with 38percent of the brokers reporting increases of between 30 to 50percent and 15 percent seeing increases of between 50 to 100percent. Umbrella saw a spread of increases where 30 percent saidrates rose 10 to 30 percent; 27 percent said rates were up 30 to 50percent; 17 percent saw 50 to 100 percent increases; and 16 percentreported increases of 100 percent or more.

The price boosts were also spread across directors and officersliability, where 32 percent of the brokers reported 10 to 30percent increase; 28 percent said increases ranged from 30 to 50percent; and 14 percent reported increases of 50 to 100percent.

"The market is rough," Mr. Crerar said. "Not surprisingly, ourmembers see increasing consumer frustration. Many industryconsumers had hoped the market would settle down by the July 1renewal period. But our survey proves categorically that did nothappen."

Mr. Crerar once again called upon Congress to pass federalterrorism backstop legislation to bring some stability to themarkets.

Details of the survey are available at www.ciab.com.