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Despite record hurricane losses, the commercial property-casualty market continues to soften, a leading electronic insurance exchange reported.
Dallas-based MarketScout said that December's composite rate index reflects an overall 6 percent reduction in pricing.
Workers' compensation pricing showed the sharpest decline at 9 percent. Commercial property and business income were the only categories to show rising prices, with a 3 percent hike for each.
With the exception of January and February, rates decreased every month during 2005, and forecasts for this year include further reductions, MarketWatch reported.
Offshore energy, coastal property and some "tough liability classes" will remain the only areas to see price hardening, the company said.
MarketScout CEO Richard Kerr said additional capacity was the prime factor behind the price softening.
"These new insurers plan to capitalize on what they perceive as an overpriced market," Mr. Kerr said.
New insurers that don't have the legacy issues their veteran competitors have will give them an underwriting advantage, Mr. Kerr added.
And don't count on reinsurers to firm up the market, as some analysts have speculated. "Many key insurers are writing large net lines, so the pricing of reinsurance is not much of a factor," Mr. Kerr said. "The renewal of the Terrorism Risk Insurance Act will provide confidence to many insurers, thus further driving a softening market."
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