MarketScout: Rates Adjusted Downward Later in Summer

May 6, 2004

MarketScout recently released its barometer for the industry. The following is commentary from Richard Kerr, chairman and CEO of the company.

“The barometer is once again at a composite of 9% since the impact of the good underwriting results of 2003 has not yet been recognized.”

“In April the Wall Street Journal captioned articles ‘American International Profit Increased 36% in First Quarter’ and ‘Lloyds Pretax Profit Takes Off’. Other insurers will probably be posting increased profits as well. The trickle down effect of these enhanced profit margins will take several months to filter into the market as a whole, but within a few months the market will begin to adjust and rates will come down. While some major insurers may be less apt to temper rates, many will take a more aggressive stance and try to secure additional market share via reduced premiums. Furthermore, as interest rates move upward there is a much greater probability insurers will reduce rates.”

“We would not be so bold as to predict the market direction a full year from today, but we are quite certain rates will be adjusted downward later this summer.”

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