The real action in the excess and surplus marketplace in 2006 is expected to be the sharp increase in property rates for catastrophe coverage, but those increases are not expected to spill over into casualty lines, analysts and executives say.
"Some people were initially suggesting that the losses would be big enough to increase rates across the board, but so far, we're not seeing any evidence of that, at least in so far as the casualty lines," says John Iten, a director in Standard & Poor's North American Insurance Group.
Excess and surplus casualty lines insurance rates, which were following a decreasing trend--in some cases by double digits--in the first half of last year, will likely continue their downward trend, though less steeply.
"Because of the tremendous hit the property facilities faced in 2005, that's where most of the rate increases will occur, and the expectation is that on the casualty side of the business, the rates will stabilize, clearly in the first half of the year," says Janet Jordan-Foster, executive vice president of specialties, Zurich in North America.
The fundamentals of the excess and surplus marketplace in 2006 have changed little from 2005, says John DiBiasi, president of the excess and surplus unit of XL Insurance. The market, he says, is "not particularly going up, not particularly going down."
"If there's anything, perhaps it's a little slide downward, but not precipitous," he adds.
January 1, 2006
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