PIACT, PIANH, PIANJ And PIANY: Agents Find Insurance Markets Softening, Mostly

Glenmont, NY - A recent survey of insurance agents in four states shows general improvement of availability for 15 classes of insurance that experienced market constriction several years ago. Bucking the trend toward greater availability were the liability market for contractors and the homeowners market in the states' coastal areas. The survey also confirmed that insurers are competing much more avidly for even average drivers in the current, improved personal auto insurance sector.

A total of 505 agencies participated in the membership survey, undertaken jointly by the Professional Insurance Agents of Connecticut (55 agencies); New Hampshire (20 agencies); New Jersey (155); and New York State (275). The organizations last conducted a similar survey in the spring of 2002, when insurance markets were reeling from the impact of typical cyclical constriction, compounded by the catastrophic losses of Sept. 11, 2001.

The four state associations selected 15 insurance lines where market disruption had been reported on an anecdotal basis and asked members to rate market conditions on a scale from 1-"highly competitive" to 5-"impossible to place" (except in state-sponsored residual markets, if any). Intermediate choices included 2-"somewhat competitive;" 3 "adequate market, some underwriting selectivity;" and 4-"difficult market."

"Our survey results confirm what we have heard anecdotally, that the property/casualty insurance market has opened up in the past couple of years, even for hard-to-place insurance risks," said Ellen Kiehl, Ph.D., assistant executive director at PIACT, PIANH, PIANJ and PIANY. "Agents in both Connecticut and New Hampshire gave better availability ratings to 11 of the 15 classes, while agents in New Jersey and New York gave better ratings to 10 classes, compared to ratings in the 2002 survey. New Hampshire and Connecticut agents rated four classes as less available than three years ago. Three classes got worse ratings in New Jersey and two in New York than in 2002, with two classes in New Jersey and three in New York rated the same in both years."

Agents in every state said it is tougher to get general liability coverage for general contractors. In New York the rating went from 4.2 to 4.5. New York's contractors have been told that insurers are reluctant to provide liability coverage due to the state's Labor Law provisions that can hold contractors to an absolute liability standard for some accidents. However, agents also reported tighter general liability markets for general contractors in Connecticut (4.5 versus 3.9 in 2002); New Hampshire (4.6 versus 4.5); and New Jersey (4.4 versus 4).

In all four states, this is now the tightest-rated class, replacing long-haul trucking. Truckers were the most difficult class in 2002 in all but New Hampshire, where they tied with general contractors at 4.5 for that distinction.

In three of the four states liability markets for artisan contractors tightened as well, though not to the same extremes as general contractors. All but New Hampshire agents rated artisans harder to insure but not (except in New York) approaching "difficult market" territory. Still, artisans faced tougher going in Connecticut (3 versus 2.9 in 2002); New Jersey (2.9 versus 2.8) and New York (3.8 versus 3.3).

Coastal homeowners also failed to benefit from the trend toward more competition except in New Hampshire, where agents rated this class significantly better than three years ago (3.8 versus 4.3). But the class was rated harder to insure in Connecticut (3.9 versus 3.7) and New Jersey (4.2 versus 4.1) and stayed the same in New York (4.1).

The PIA associations' survey picked up on a strong spurt of competition for personal auto business that extends even to the standard and nonstandard classes. Preferred drivers were not among PIA's 15 hard-to-place classes. All states reported better availability for standard auto. The rating fell to 1.8 in both Connecticut (from 2) and New Hampshire (from 2.2). The change was more dramatic in New Jersey, where standard personal auto was rated 2.3 (down from 3.7) and New York, at 2 (down from 2.8).

Even nonstandard drivers benefited from improved markets, gaining ground in New Hampshire (2.2 versus 2.5 in 2002); Connecticut (2.3 versus 2.4); New Jersey (3.1 versus 3.3) and New York (2.4 versus 3.2). The improvements in New Jersey and New York personal auto market ratings by PIA members corroborate other evidence of significant changes in these states, where regulatory changes and vigorous anti-fraud efforts have led to better underwriting results and (in New Jersey) new players entering the market.

SOURCE: PIACT, PIANH, PIANJ and PIANY