Last year's hurricane losses have not resulted in substantial insurance price increases for much of the country, but the situation for coastal properties is a different story, a recent producer group survey revealed.
Most of the commercial property-casualty marketplace has not seen the widespread price increases predicted by some analysts in the wake of Hurricanes Katrina, Rita and Wilma, according to the Council of Insurance Agents and Brokers' Commercial Insurance Market Index Survey for the fourth quarter of 2005.
For small accounts up for renewal (those totaling less than $25,000 in broker commission and fees), 65 percent of respondents said premiums either remained stable or dropped by as much as 10 percent. The same held true for 60 percent of medium-size accounts (those between $25,000 and $100,000 in commissions and fees) and 52 percent of larger accounts.
An additional 17 percent of large accounts experienced premium drops of between 10 percent and 20 percent.
When asked if there had been pricing changes due to the hurricanes, 58 percent of the survey respondents said “no,” while 42 percent said “yes.”
“Some lip service to market tightening, but little if any evidence of it,” said an unidentified Midwestern broker responding to the survey. “Overall, the market continues to be competitive.”
However, in the Southeast, including Florida and the Gulf Coast, the impact of last year's storm season has been much more severe. “Two markets exist–coastal property (and that definition has expanded north) and the rest,” observed a broker from the Southeast.
Insurance underwriters in that region are looking much more carefully at risks, the survey found. Capacity is dropping, and wind deductibles and exclusions are rising sharply, CIAB noted.
One area drawing special attention is wind-code compliance, with older buildings being given higher premiums than those built more recently. “Over 75 percent of the accounts in the Southeast have seen rate increases. Anything with wind exposure is seeing significant rate increases,” a broker from the Northeast responded.
For Southeast commercial property coverage, 45 percent of accounts managed by the survey's respondents saw price increases, with 10 percent of those experiencing an increase of 30-to-50 percent.
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