Buyers of primary and excess casualty insurance are finding declining rates, abundant capacity and intense competition in the ongoing soft market, observers say.

Competition remains strong as insurers seek to woo new general liability business while holding onto their existing clients. Some observers also say there has been some broadening of coverage through additional endorsements and lower retentions.

Accounts with a good loss experience are “probably still seeing reductions,” said Stephen Truono, vp, global risk management and insurance for White Plains, N.Y.-based Starwood Hotels & Resorts Worldwide Inc.

“The most significant reductions are typically achieved if the account is put out in a formal competition among insurers” vs. renewing with the incumbent, Mr. Truono said.

“Even risks that have had losses are still getting premium and rate decreases,” said David Rogers, vp and risk manager at AXA Equitable Life Insurance Co. in New York. Overall rates for midyear renewals have been declining “anywhere from 5% to 20%” for loss-free accounts, he said.

Eric Silverstein, managing director and casualty practice leader for Beecher Carlson Holdings Inc. in Atlanta, said six months to a year ago, “the marketplace was starting to plateau in terms of the percentage reductions.” Now, though, “reductions are starting to increase again.”

There has been “noticeable downward movement in rates and premiums over the last quarter, and it applies broadly over a wide range of risks,” said Jim Mathewson, a senior vp with Lockton Cos. L.L.C. in Kansas City, Mo.

“The soft market continues unabated for most low to moderate risk classes, and that's the case for both the primary casualty as well as the excess,” said Anthony DeFelice, managing director of Aon Corp.'s national casualty division in New York.

High-risk classes are “seeing some slight rate increases depending on what the client exposure information looks like, but nothing that's earth shattering,” said Mr. DeFelice.

Jonathan Zaffino, New York-based managing director and U.S. global risk management casualty leader for Marsh Inc., who focuses on larger clients, said primary general liability coverage continues to be “a very competitive market.” Marsh is seeing prices that are flat to midsingle-digit reductions on average, while “terms and conditions are very reasonable,” he said. “Clients are able to achieve what it is they're looking for.”

Lou Iglesias, New York-based chairman and CEO of Chartis Inc.'s commercial casualty unit, said, “It seems at this point that the (primary large-account) market has pretty much flattened out,” with fairly stable terms and conditions.

“We've probably allowed 10% to 15% rate reductions in the last year or so, but we're not giving much more this year because we don't think we have to,” said David Price, executive vp and chief underwriting officer of Burns & Wilcox Ltd. in Farmington Hills, Mich.

Tom Martin, New York-based managing director in Marsh's excess casualty placement group, said insurers “are having difficulty increasing rates as capacity remains plentiful.” While incumbents are trying to maintain or increase their rates, many insurers are experiencing premium reductions as exposures continue to decline, “but at a slower pace.”

The lead umbrella markets for complex risks, however, may be seeing slight rate increases because there is less competition in that sector, Mr. Martin added. “Excess of the lead, however, rate reductions are still achievable due to the significant capacity available,” he said.

Insurers are working hard to keep their existing accounts, observers say.

Diana Amodeo, New York-based chief underwriter for excess casualty, North America, at XL Insurance, said while retention of existing accounts is strengthening, “it makes (acquiring) new business challenging because incumbents are holding onto accounts” and doing what is necessary to retain the business.

“When accounts do move to a competitor, they're moving to the tune of even 30% to 40% off expiring premiums. We just had one where we had to walk away because the pricing just tanked,” Ms. Amodeo said.

Paul Horgan, New York-based chief underwriting officer, global corporate in North America, for Zurich Financial Services Group, also said “the incumbents are working very hard to maintain their existing portfolios, so we're not seeing a lot of business moving.” Incumbents “seem to be holding onto their portfolios,” he said.

“We have seen some requests for broader terms and conditions” in excess casualty lines, but “we've kept our discipline,” said Chartis' Mr. Iglesias.

However, Mike Pesch, area chief operating officer of Itasca, Ill.-based Arthur J. Gallagher Risk Management Services Inc., said “a few national carriers have shown some expanded endorsements that they're writing to their policies. For little or no additional premium, for example, we're seeing some manufacturers (errors and omissions)-type coverages added, which are usually not included in a normal package or GL policy.”

In addition, “we're seeing some product recall expense (coverage) built into some of the package forms that we hadn't seen. Usually, that was separate cover that you needed,” Mr. Pesch said.

The additional coverage is “another sign that the carriers are trying to differentiate themselves in a bitterly competitive market,” he said.

In another trend, Lockton's Mr. Mathewson said some insurers are offering lower attachment points “because, in some cases where there is just no more rates or premiums to be gained, we just negotiate more coverage.”

Several observers said a further trend this renewal season is insurers' willingness to put in a “most favorable venue” policy clause for insuring punitive damages, which provides such coverage in states where it is allowed if the insured has some tie to the jurisdiction. This means risk managers do not have to go offshore to get the coverage, observers say.

In addition, “some buyers are considering claims-made policies for general liability and their excess programs, because it gives you just that one last way to shave a little more premium out of your structure,” Pam Ferrandino, executive vp, national casualty practice leader of Willis North America in New York, said of midyear renewals.