Rates still softening, claims Marsh

Insurance rates in the UK continued to fall, but at a slower rate, across all major lines of business in the first quarter of 2009, according to global broker Marsh.

The figures are based on business placed by Marsh, on behalf of large UK corporates, in what it claims is traditionally the highest volume quarter of the year.

They show that rates fell in both property and liability lines: on average, property rates fell by 0.5%, Employers’ Liability rates by 4% and Public Liability by 3.5%.

Tim Pritchard, Marsh’s UK placement leader, said: “Despite rising claims, competition to maintain market share and new entrants into some lines of business, have meant that rates continue to fall. However, the rate of decrease has now slowed significantly, especially for clients seeking multi-year deals.

“The majority of our property clients saw no change to their insurance rates at renewal. However, where new long term deals were struck, increases were generally agreed for years two and three. The size of these increases varied between 2.5% for each year to 10%, depending on the risk.

“The average rate reduction for employers’ liability has reduced this quarter to the lowest level since 2004. Most renewals were flat, with reductions in a small number of cases. For public liability, the magnitude of the rate reductions has again reduced and is now below 5%. The majority of renewals in this class were also flat.”

“These results need to be put in the context of the last four years. In this time, property and casualty rates have come down by, on average, 47%.

“As insurers’ margins are further squeezed, we expect rate reductions to become increasingly rare for the rest of this year. However, with capacity plentiful and competition still strong, insurers will have limited opportunities to push for large rate increases. Clients that can prove good risk management will also continue to do better.”