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Property/casualty rates becoming less volatile


While industry observers say rate increases for commercial property/casualty insurance are getting smaller or even flattening, that doesn't mean a true soft market is likely this year.

Continuing low interest rates are making it unlikely that any individual insurer will step out and aggressively compete on price, observers say.

“At this point, I'm optimistic we'll see a plateauing” of commercial rates, said Mark Dwelle, an insurance analyst at RBC Capital Markets, a unit of RBC Dominion Securities Inc. in Richmond, Virginia.

He predicted there would be no strong directional move either way.

Richard Kerr, CEO of Dallas-based electronic insurance exchange MarketScout, also foresees no dramatic changes.

Mr. Kerr said the use of big data and other analytics tools means “I don't think we'll see again the massive market swings like we did eight or 10 years ago.” More complete information means management is better equipped to deal with changes, he said.

Instead, “you may have a mini soft market for the primary insurers that lasts six months,” Mr. Kerr said. The dramatic hard and soft markets of the past could well be replaced by shorter cycles that are not as deep, he said.

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