PREMIUMS ACROSS all major commercial lines of insurance in the US continued to fall in the second quarter of 2008 despite plunging net profits.

However, drops did slow and there were rises in sectors affected by the sub-prime fall-out.

The quarterly benchmark survey, issued by the Risk and Insurance Management Society (RIMS), found that after dropping sharply in the first quarter, the average directors’ and officers (D&O) premium fell a relatively small 6.4 per cent in the second quarter.

But mounting D&O claims related to the sub-prime mortgage crisis had increased premiums for financial and real estate firms with sub-prime exposure.

Property insurance premiums fell by 6.1 per cent, repeating the first-quarter price decreases for renewals, despite forecasts of a severe hurricane season. General liability premiums fell by nearly 5 per cent, up from 2 per cent in the first quarter. After an unexpected 11 per cent drop in the first quarter, the average workers’compensation premium fell just 1.7 per cent in the second quarter.

“We are now in hurricane season and a bad storm could bring a quick end to the soft market,” said John Phelps, a member of the RIMS board of directors. “While the direction of the market could change quickly, pricing trends otherwise continue to be favourable for risk managers. Reinsurers and primary markets are agonising over falling premiums, but they also are concerned about forecasts of higher than normal hurricane activity this year,” Phelps said.

“Insurers net profit plunged in the first quarter, due largely to falling rate levels,” said David Bradford, editor-in-chief of Advisen, which collects and analyses the data for RIMS.

“But the property and casualty industry is still overcapitalised, which continues to put downward pressure on premiums. It is still very much a buyers’ market, and should remain so, at least through 2008,” Bradford said.