Bartlett Group

In today's economic environment, many of our clients are understandably occupied with controlling costs including insurance. Many in our industry have been predicting a hardening of the market (i.e. increasing of rates) for some time, as insurers experience pressure on their margins through declining investment returns, which in recent years have cushioned underwriting losses.

Some areas of the market have begun to show signs of hardening for specific coverages and in particular for businesses with poor risk management and claims history. Specifically, segments of the D&O and E&O markets are experiencing increases.  However, by and large, and through a combination of reduced exposures, a benign 2009 hurricane season, excess capacity and aggressive competition between carriers, the market remains soft.

In its recent report—"Review and Outlook 2009-2010, U.S. Property/Casualty Insurance"—Fitch projects the property and casualty industry will continue to generate underwriting losses in 2010 and that the industry is now solidly entrenched in the soft phase of the market cycle.

What does this mean for you? For the next two quarters at least, property and casualty rates are expected to remain flat or to increase by single digits, ensuring that your total insurance spend remains relatively low when compared with historic rates. However, insurers' reserve cushion is growing thin. A hardening of insurance rates, leading to increases in insurance premiums, is viewed by insurance professionals and commentators alike as inevitable. What is less certain and much debated is the timing of this turn. In the short term, only a severe market dislocation—such as severe catastrophe, major company withdrawal or merger-could profoundly change the market direction. The medium- to long-term trends will be driven by other factors including economic growth, inflation, the investment environment and merger and acquisition activity in the insurance market.

One thing that can be assured for your business is that we will continue to ensure you have the right coverage, with the right carrier and at the most competitive price.