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Member, Beacon International Group, Ltd.
Property/casualty insurance rates dropped an average 5% in November compared with those of a year earlier, MarketScout said.
The Dallas-based electronic insurance exchange reported that all lines of business experienced rate decreases except directors and officers liability, which was flat. General liability coverage posted the largest drop at 6% in November compared with the previous year.
There are signs the soft market may continue, courtesy of insurance brokerages, according to MarketScout.
“As we continue to contemplate when the market will turn, we must consider outside distribution changes that could further prolong the soft market,” MarketScout said in a statement accompanying the report.
“Megabrokers are taking interest in small- to middle-market business again. It seems this mantra comes about every 10 years or so, but this time it may be more serious,” MarketScout said. “The big boys are not trying to grow middle-market business internally as in years past. This time they plan to buy instead of build. If all of the megabrokers start acquiring independent retail agencies, they could easily buy 30% to 40% of the market in three or four years.
“But, how would this impact pricing?” MarketScout asked. “Well, the first thing to recognize is that megabrokers would be able to use their muscle to cut better deals for themselves and their clients. If the result is more commissions for the megabroker and a better deal for the insureds, it’s a win-win situation…for everyone but the insurers. No one knows how this will play out, but it is yet one more thing for middle-market insurance company executives to worry about.”