MarketScout’s US property and casualty (P&C) composite rate fell 4% in December, as insurers continued to fight for market share.

CEO Richard Kerr the drop demonstrates that “market cycles are part of our life, be it insurance, real estate, interest rates or the price of oil”.

“Market cycles are going to occur, without question. The only questions are when, how much and how long?”

MarketScout has been tracking the US P&C market since 2001, and Mr Kerr says the current environment is “relatively benign”.

“It seems the length and veracity of the market cycles has become less volatile in the past five or six years. Thus, the impact of a hard or soft market in today’s environment may be 5% or 6% up or down.

“Can you imagine how we would react today in a market such as that of July 2002, when the composite rate was up 32% Or in December 2007, when the composite rate was down 16%?”

MarketScout’s historical barometer reflects a mean average rate increase of 30% in 2002. For 2007, the mean average decrease was 13%.

Mr Kerr says today’s underwriters have better tools to price products and forecast losses.

In US personal lines, MarketScout reports the composite rate was down 1% in December. A “relatively low” catastrophe year and ample capacity resulted in a competitive pricing environment.

“The lack of catastrophes and the additional market capacity will probably continue to result in aggressive pricing,” Mr Kerr says.