Here's my read of the current marketplace for upcoming business insurance renewals:
Renewal Premiums: -5%
Renewal Coverages: Liberal Terms
Buyer's Outlook: Long-Term: Prices Flat - Soft Market Continues
I continue to see every indication that the commercial insurance marketplace, as a whole, will continue for at least the next six months as a buyer's market.
Agents keep telling me that they are seeing firmer prices. However, when the actual renewal quotes come in, the prices continue to drop when there is competition for the account.
A recent gathering of insurance executives in Maine included a panel discussion on the future of the market. The room was filled with insurance agents and insurance company people. Many made comments about the current inadequacy of premiums and low-price foolishness. Frankly, what I heard was a complete lack of understanding about how free markets work. Supply and demand always finds a way... The current supply of insurance exceeds demand, so prices decline. Until insurers walk away from clients (decreasing supply), prices will stay at what are historically low levels.
The other part of supply and demand is that suppliers always want high prices, and buyers always want low prices. Push and pull makes it all work.
Renewal Premiums: -5%
Renewal Coverages: Liberal Terms
Buyer's Outlook: Long-Term: Prices Flat - Soft Market Continues
I continue to see every indication that the commercial insurance marketplace, as a whole, will continue for at least the next six months as a buyer's market.
Agents keep telling me that they are seeing firmer prices. However, when the actual renewal quotes come in, the prices continue to drop when there is competition for the account.
A recent gathering of insurance executives in Maine included a panel discussion on the future of the market. The room was filled with insurance agents and insurance company people. Many made comments about the current inadequacy of premiums and low-price foolishness. Frankly, what I heard was a complete lack of understanding about how free markets work. Supply and demand always finds a way... The current supply of insurance exceeds demand, so prices decline. Until insurers walk away from clients (decreasing supply), prices will stay at what are historically low levels.
The other part of supply and demand is that suppliers always want high prices, and buyers always want low prices. Push and pull makes it all work.
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