US insurance industry data shows business insurance rates continued to fall during the fourth quarter of 2008 - but the soft market may be coming to an end.

Rates for property, general liability, and directors and officers' (D&O) insurance premiums all decreased at a materially slower pace than in recent quarters, according to RIMS Benchmark Survey, the industry's leading survey of policy renewal prices as reported by North American corporate risk managers.

Industry analyst Advisen, the company which compiles the data for RIMS, believes commercial insurance prices should begin increasing by the fourth quarter of 2009 or the first quarter of 2010.

The average general liability premium fell more than any other line at 5.9 percent in the fourth quarter, but this decrease is modest when compared to the 9.6 percent decline in the third quarter.

Property premiums were off by 3.8 percent, again modest when compared to the 8.5 decline in the third quarter. Workers' compensation continues to reflect little volatility with a 0.8 percent decrease in the fourth quarter, consistent with a two-year trend.

D&O continued to show two trends: an increase for financial institutions buying insurance in the face of a meltdown in that sector and falling average premiums for commercial business in other sectors.

D&O rates fell 1.2 percent in the fourth quarter, down from 2.1 percent in the third quarter. Excluding financial institution buyers of insurance, the fall in premiums was 4.5 percent in the fourth quarter, as compared with 7.5 percent in the third quarter.

"Risk managers tracking RIMS Benchmark Survey results are keenly aware that we may not see continued price reductions for long," said RIMS director Daniel Kugler.

"The most recent data show that the soft market isn't over yet, but it may be losing steam."

Advisen executive vice-president David Bradford said: "Overcapacity has driven a long soft market and the events of this past quarter may portend a market shift for commercial insurance.

"In addition to much higher than average catastrophe loses in 2008, insurance companies are facing claims from the sub-prime meltdown, global credit crisis and now even from the Madoff scandal. Reserves for these claims and material losses in investment income have led to negative earnings and new capital is scarce.

"We expect the next few quarters of data from the RIMS Benchmark Survey to show the end of the soft market."