Commercial property/casualty rates dropped 6% on average in July compared with the same month a year ago, MarketScout said Wednesday.

Rates decreased for all sizes of U.S. accounts and classes of business, the Dallas-based electronic insurance exchange said. General liability coverage experienced the greatest decline at 7%, while directors and officers liability registered the smallest decrease at 2%.

“Many insurance brokers expected tighter terms and increased pricing after the July 1 treaty renewals,” Richard Kerr, MarketScout’s chief executive officer, said in a statement accompanying the results. “Generally speaking, it didn’t happen. July 1 renewals were a bit tougher for property cat risks, but most reinsurance treaties were placed without much trouble. We are still in a prolonged soft market.”

“Several major surplus lines insurers have decided to wait it out until the admitted market exits what is traditionally considered the surplus lines market,” Mr. Kerr added. “This strategy will be very wise if the market starts to turn and the larger admitted insurers begin restricting their appetite; however, if we have status quo, some surplus lines companies could lose significant market share, which will be nearly impossible to replace,” he said.

“After all, most state insurance regulators require agents and brokers to use an admitted insurer if one is available, at any price,” Mr. Kerr said.

Copyright © 2009 Crain Communications, Inc.