Council Says Markets Distressed

A national survey of insurance brokers has found marketsdistressed as companies clamp down on underwriting and raiseprices, leaving groups of clients to do without insurance in somelines.

The Council of Insurance Agents and Brokers documented what itcalled “the deep and deepening distress of the commercial insurancemarket,” in its quarterly “Commercial Insurance Market Index”survey.

“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, CIABs 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.

Among small firms, with commissions and fees of less than$25,000, 75 percent reported rates rising in the 10 to 30 percentrange, and 7 percent said rate increases were between 30 to 50percent.

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 increaseswere at more than 100 percent. Forty-two percent said they did nothandle the line.

The CIAB said brokers report that more and more physicians arefinding they must join state assigned risk pools or do withoutinsurance due to increased rates and strict underwriting.

“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.”

Reproduced from National Underwriter Property &Casualty/Risk & Benefits Management Edition, July 29, 2002.Copyright 2002 by The National Underwriter Company in the serialpublication. All rights reserved.Copyright in this article as anindependent work may be held by the author.