Customers seeking directors and officers liability insurance are seeing small but significant rate reductions in the current London market, according to a survey of underwriters by the insurance brokerage firm Willis.
The survey, the Willis Index, which tracks this sector, found for the second quarter of 2006 that competition for business in the London market is being driven by a more than adequate capacity and a willingness to negotiate coverage not seen for some years.
With many insurers having recently overhauled their wordings, and with others due to do the same, the buyer's market looks set to continue into the third quarter.
The Willis Index, a quarterly survey of London market insurers, asks participants for their views on the underwriting market over the past three months and for the next three months. There are four surveys in the series with each index exploring a different coverage area.
All respondents agreed that primary premium rates fell in the preceding quarter, with 66 percent reporting decreases of 10 percent or less and the remaining 34 percent noting larger reductions of up to 20 percent.
Over the next three months the trend looks set to continue, with a massive 75 percent predicting reductions of up to 10 percent and only a few of the brave, 8 percent, suggesting that rates could flatten out.
While the overwhelming majority of respondents noted reductions in excess layer pricing over the last three months, a small but noteworthy group of 8 percent suggested that rates actually remained static during this period, indicating that there could be more resistance to declining rates among excess insurers where competition has been the greatest.
For the next three months, this small group of respondents remains of the opinion that rates will be static. However, the rest, 84 percent, agree that reductions will be less than 10 percent.
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