Council Survey Shows September 11 Impact
The Third Quarter Commercial Market Index released recently by the Council of Insurance Agents and Brokers showed substantial increases in commercial insurance premium rates for accounts of all sizes and across all property/casualty lines. Broker comments indicated prices skyrocketed for vulnerable risks after September 11. "The index shows the hard market is becoming considerably harder after September 11 with no decreasing prices cited in any of the commercial insurance lines and some very considerable increases," said Ken Crerar, President of the Council. "The September 11 terrorist attack on the World Trade Center adds fuel to the harder market trends we have observed for over a year now," he added. The Index shows the majority of third quarter increases are in the 10-30 percent harder market range. However, a number of Third Quarter Index respondents reported increases between 30 and 50 percent. A significant few saw even higher price increases in property, umbrella, and business interruption coverage. Some respondents observed renewal increases of 100 percent or more, the Council reported. "To capture the impact of the September 11 events, we asked members some open-ended questions about specific problems they were encountering in the market. The comments are revealing. There is some confusion in the market while insurers evaluate the recent event's impact on their capacity and appetite for underwriting," Mr. Crerar observed. A majority of brokers reported serious problems in the property market and with umbrella coverage since the September 11 attack. One broker said, "September 11 made things go wild. Property went crazy especially for large values or where reinsurance is involved. We have also seen larger increases in other lines, particularly workers' compensation, umbrella, and large casualty accounts." According to the Index, capacity is an issue for a range of coverages including property (particularly habitational), aviation and airports, contractors, all types of trucking, reinsurance, nursing homes, and catastrophe. While capacity was already shrinking for some of these lines, today's market is making it even more difficult to place most commercial insurance, the Council reported. U.S. RE is a member of the Council, which represents the largest, most productive, and most profitable commercial insurance agencies and brokerage firms in the U.S. and abroad. Council members place nearly 80 percent of the U.S. commercial property/casualty premiums, which makes the organization's quarterly Index one of the most reliable guides to current market conditions.
U.S. REviews December 2001
