Mortgage Loan Center

It has become increasingly apparent that insurance premium's are increasing but unevenly across different market segments. The biggest increases are being found to occur in the personal lines while as much as half of renewals in commercial lines are remaining unchanged, brokers are reporting.

A survey carried out by the National Insurance Brokers Association's (NIBA) has most of the broker respondents stating that the rises they were experiencing were still within reason and mostly covered those risks that are hard to place with a carrier.

According to NIBA the use of more sophisticate risk assessment techniques contributed to the variation across different insurance products that is being experienced in this insurance cycle. Many brokers say that the increases reflect sound assessments.

According to the members participating in the survey, 24 per cent of their commercial clients who are hard to place, risk-wise, experienced significant premium increases. This according to NIBA chief executive Noel Pettersen.

About 18 per cent of the brokers surveyed report that insurers are in some cases actually cutting rates so as to achieve a larger market share as regards particular commercial business classes. Only 5 per cent of those surveyed indicated that they felt that the decreases they experienced were not rational.

According to the survey 26 per cent of brokers surveyed were receiving raises in premiums fro their clients, while another 23 per cent reported experiencing decreases, and 18 per cent said insurers were still cutting market rates to achieve market share.

The largest increases were being experienced in personal lines of insurance, and in particular home and contents and personal auto insurance. Seventy percent of those responding say that they had experienced increases of between 1 and 30 per cent, while 27 per cent reported no change in premiums. This figure for commercial line stood 51 per cent.

Other specific areas that experienced increases included public liability coverage. For this category of coverage, forty percent said they were experiencing increases in premium of between 1 and 30 per cent.

NIBA chief executive Noel Pettersen said commercial insurance providers were still experiencing intense competition and were, therefore, lowering premiums to adjust to market conditions.

According to Petterson, there are some leading insurers who over the past six months have said that their premiums will have to rise in order to deal with the situation of increasing claims and falling investment earnings. At the same time however, he points out, the intense level of competition in the commercial insurance market is maintaining premiums at a lower level than would otherwise be the case.