MarketScout sees end of soft market

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12 December 2011

US electronic insurance exchange MarketScout has heralded the end of the enduring soft market cycle, with all classes recorded in the US market in November now either flat or up slightly.

“After six years and eight months the soft market cycle has finally broken,” CEO Richard Kerr said.

WR Berkley CEO Bill Berkley agrees, telling delegates at a Goldman Sachs conference in New York: “In the current cycle we think we are just at the beginning of price increases.

“Prices started to turn the end of last year, the beginning of this year and we are definitively in a hardening market.

“The beginning of this year I told people that I expected 5% to 8% price increases by the end of the year. I would still expect that to be the case. but we are really just at the beginning of that happening.

“Along with price-hardening, terms and conditions are changing, which lets the business you write become more profitable.”

MarketScout’s November figures show the first composite rate increase (1%) since February 2005.

Inland marine, umbrella/excess, professional liability, D&O liability, crime and surety are flat, while all other areas are rising. The upward swing is at best 2% for commercial property, workers’ compensation and business owner policies, while all others are 1% up. There were no decreases.

Jumbo accounts (above $US1 million) were down 1%, and large accounts ($US250,000-$US1 million) were flat. But medium accounts ($US25,000-$US250,000) and small accounts to $US25,000 were up 1% and 2% respectively.