The market for property and casualty insurance will stay soft next year, with premiums expected to decline further or at least remain flat, according to international management consulting firm Watson Wyatt Worldwide.

The property and casualty practice leader of the company's New York insurance and financial services consulting group, Orin Linden, says strong competition and healthy capacity are forcing insurers to lower premiums to win business in a buyer's market.

Casualty insurance rates are forecast to drop by 5-10% next year, with property insurance rates likely to be flat.

Rates have declined in both lines in the past few years as the industry enjoys a period of strong profitability, says Mr Linden.

Other segments - including workers' compensation, directors' and officers' (D&O) and reinsurance - are also expected to experience soft market conditions.

Watson Wyatt also predicted possible enhancements for insured companies in some areas of coverage, particularly D&O liability.

Mr Linden says with the marketplace showing little sign of hardening, it is an ideal time for buyers to review their risk management program structure and insurance policies.

Buyers could then decide whether to explore alternative risk management solutions such as insurance captives.

The consultancy says buyers considering switching carriers should analyse long-term credit ratings, with many claims not payable for six to 10 years.