MarketScout
Market Barometer - April 2007

April Rates Down 12%

MarketScout has published the commercial US property and casualty industry pricing conditions for April 2007. April rates matched the March 12% decline. However, there was some movement in various lines and classes of business. Property, Business Interruption, Workers’ Compensation, EPLI and small account premiums softened further, as compared to March 2007. Jumbo accounts had slight premium increases, as did General and Excess Liability placements.

According to Richard Kerr, Chairman and CEO of MarketScout, “Insurers continue to aggressively seek new business by broadening coverages and decreasing premiums. Only the most disciplined, mature companies are maintaining a moderate approach. Many new insurers don't have that luxury because they raised capital based upon pro forma business models which assumed certain levels of premium to amortize the expenses related to staffing, automation, rating, and claims systems. As a result, these insurers are forced to price aggressively in order to write enough business to justify their fixed processing and administration expenses. If they don't write the business, they will certainly make a loss. Thus, they justify their low rates by assuming the premium volume will at least help amortize their expenses and perhaps they will even get lucky and generate a profit. A very dangerous game indeed.”

The results for April 2007, broken down by coverage class, industry class and account size were as follows:

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MarketScout distributes insurance products to insurance professionals on behalf of 40 "A" rated insurance companies representing over 300 different industries and coverage classifications. MarketScout has a network of 60,000. As a result, MarketScout is in a unique position to gauge the overall state of the Property & Casualty market and has developed the "Market Barometer" which reflects the condition of the market on a monthly basis.

	The "Market Barometer" is calculated based upon data points which may include information such as: Percentage increase/decrease in renewal premium Percentage of accounts renewing "as expiring" Changes in coverage terms Number of insurer insolvencies Number of insurers entering/departing a particular market Market Perception Agent and broker compensation Reinsurance terms and conditions Interviews with agents, brokers, insurers and reinsurers Online survey input from our agents Captive Market Activity
The findings of MarketScout’s barometer are further supported by surveys conducted by The National Alliance for Insurance Education and Research. These surveys were conducted during CIC and CRM institutes held across the United States in April 2007. MarketScout The barometer is compiled by MarketScout, a Dallas, Texas based electronic insurance exchange which underwrites and distributes hundreds of product lines to its 60,000-member agency network across the United States. Over 40 "A" Rated carriers participate in the MarketScout exchange platform at http://www.marketscout.com. For more information, contact Vilma Scott at vscott@marketscout.com. Richard K. Kerr, CEO of MarketScout.com The Market Barometer is published on the 5th of each month for the previous month's market. If you would like to use the barometer for an article or publication, please contact: Vilma Scott vscott@marketscout.com 972-934-4224   The composite market conditions from 2001 to 2007 are set forth below.