Commercial Insurance Prices Dropped 4% in Q3, Reports Towers Perrin

December 17, 2008

Commercial insurance prices dropped four percent during the third quarter of 2008 compared to the same quarter a year ago, according to Tower Perrin’s most recent commercial lines insurance pricing
and profitability trends (CLIPS) survey.

This deterioration, while less severe than the five percent drop seen in the second quarter of 2008, comes at the front end of the decline in the financial markets, and the full effect of the current global economic downturn on commercial prices has not yet been captured.

Property pricing softened considerably, while price changes in specialty lines remained fairly flat for the second consecutive quarter, according to the survey.

Updated loss ratio indications from the survey show accident year 2007 loss ratios deteriorating 11 percent relative to 2006, and the partial indication for accident year 2008 shows a 10 percent decline.

“The overall deterioration in pricing is a continuation of the trend cited
when we published our first survey almost four years ago,” said Jeanne Hollister, Towers Perrin managing principal and Property/Casualty Insurance practice leader for the Americas region. “We do, however, expect to see abatement in soft market conditions in the U.S., as companies consider a number of factors in their pricing decisions, including equity and credit-related losses to asset portfolios, a continuation of poor underwriting results in many sectors, heavy weather-related losses and a forecasted spike in directors and officers liability claims.

“In our view, the industry is fast approaching a point where the underwriting results are no longer favorable relative to economic hurdle rates, and that generally signals a ‘tipping point’ in terms of companies’ pricing actions,” added Hollister.

Towers Perrin said that CLIPS data are based on both new and renewal business obtained directly from carriers underwriting the business, and indicate more conservative price reductions than other marketplace surveys.

CLIPS participants include the majority of both the top 10 commercial lines companies and the top 25 insurance groups in the U.S.
Source: Towers Perrin
http://www.towersperrin.com

FARMERS INSURANCE RANKS MOST SECURE PLACES TO LIVE; NORTHWEST TOPS LIST

No Byline. Insurance Journal. 2008/12/15.

Those seeking a place to live, work or raise a family in a safe and secure environment should consider the Pacific Northwest, according to the fifth annual Most Secure U.S. Places to Live rankings from Farmers Insurance Group of Companies. The rankings, compiled by database experts at http://www.bestplaces.net, took into consideration crime statistics, extreme weather, risk of natural disasters, housing depreciation, foreclosures, air quality, life expectancy and job loss numbers in 379 U.S. municipalities. The study divided the communities into three groups: large metropolitan areas, mid-size cities and small towns. The Seattle-Bellevue-Everett, Wash., area encompassing Puget Sound topped all large metropolitan areas (population of 500,000 or greater) in the 2008 study. A high job growth rate and long life expectancy, along with minimal housing depreciation and lack of extreme weather contributed to the area’s top rating in the study. The area is home to such Fortune 500 companies as Amazon.com, Nordstrom, Starbucks, Safeco Corp. and T-Mobile USA. Olympia, Wash., repeats its 2007 honor as the most secure mid-size U.S. city (population between 150,000 and 500,000), while Corvallis, Ore., also defends its title as the most secure small town (population less than 150,000). The Seattle-Bellevue-Everett area, which was not ranked in the Top 20 in the first three years of the Farmers study, jumped from 17th place among the large metropolitan cities in 2007 to first place in 2008. The Portland/Beaverton, Ore./ Vancouver, Wash., area ranks second among large cities in this year’s study, while Honolulu, Hawaii, is third. This marks the fifth straight year Honolulu is ranked in the Top 20 among large cities. Las Cruces, N.M., is second to Olympia among the most secure mid-size cities, with Salem, Ore., third. Las Cruces took top honors among mid-size cities in the 2006 Farmers study, while Olympia has been ranked in the Top 20 all five years of the study. Bismarck, N.D., and Logan, Utah, rank second and third, respectively, behind Corvallis among the most secure small towns. It is Bismarck’s third consecutive appearance in the Top 20, and the second year in a row for Logan. Following are the rankings:

        Large Metro Areas (500,000 or more residents)

        1.                          Seattle-Bellevue-Everett, Wash.

2.                          Portland-Beaverton, Ore./Vancouver, Wash.

3.                          Honolulu, Hawaii

4.                          El Paso, Tex.

5.                          Tacoma, Wash.

6.                          Harrisburg-Carlisle, Pa.

7.                          San Francisco-San Mateo-Redwood City, Calif.

8.                          Bethesda-Gaithersburg-Frederick, Md.

9.                          Salt Lake City, Utah

10.                      Pittsburgh, Pa.

11.                      McAllen-Edinburg-Mission, Texas

12.                      San Jose-Sunnyvale-Santa Clara, Calif.

13.                      Albuquerque, N.M.

14.                      Boise City-Nampa, Idaho

15.                      Austin-Round Rock, Tex.

16.                      Scranton-Wilkes-Barre, Pa.

17.                      Nassau-Suffolk Counties, N.Y.

18.                      Portland-South Portland-Biddeford, Me.

19.                      Edison, N.J.

20.                      Bridgeport-Stamford-Norwalk, Conn.

 

Mid-Size Cities (150,000 – 500,000 residents)

21.                      Olympia, Wash.

22.                      Las Cruces, N.M.

23.                      Salem, Ore.

24.                      Bremerton-Silverdale, Wash.

25.                      Bellingham, Wash.

26.                      Provo-Orem, Utah

27.                      Ogden-Clearfield, Utah

28.                      Lancaster, Pa.

29.                      Lynchburg, Va.

30.                      Charleston, W.Va.

31.                      Sioux Falls, S.D.

32.                      Kennewick-Richland-Pasco, Wash.

33.                      Huntington, W.Va.-Ashland, Ky.

34.                      Fargo, N.D.

35.                      Roanoke, Va.

36.                      Eugene-Springfield, Ore.

37.                      Appleton, Wis.

38.                      Charlottesville, Va.

39.                      Spokane, Wash.

40.                      Laredo, Tex.

Small Towns (Fewer than 150,000 residents)

41.                      Corvallis, Ore.

42.                      Bismarck, N.D.

43.                      Logan, Utah

44.                      Wenatchee, Wash.

45.                      State College, Pa.

46.                      Lewiston, Idaho

47.                      Morgantown, W.Va.

48.                      Harrisonburg, Va.

49.                      Billings, Mont.

50.                      Santa Fe, N.M.

51.                      Wheeling, W.Va.

52.                      Grand Junction, Colo.

53.                      Lebanon, Pa.

54.                      Grand Forks, N.D.

55.                      Casper, Wyo.

56.                      Wausau, Wis.

57.                      Mount Vernon-Anacortes, Wash.

58.                      Farmington, N.M.

59.                      Midland, Tex.

60.                      Great Falls, Mont.