Broker says rates could fall by up to 25%.
Willis has said rates could fall by as much as one quarter this year in a sign that the soft market could continue well into 2009.
The prediction has caused unrest in the market with one senior figure claiming it encouraged a lack of underwriting discipline as insurers are seeking to increase rates on all lines of business.
In a newsletter published last month by Willis’ property investors division, which provides an outlook on the insurance market for 2008, the broking giant said it expected overall market conditions for all classes of business to remain soft throughout the year.
It predicted that rates in some lines of business, including personal accident and directors’ and officers’ liability, could fall as much as a quarter.
The newsletter said clients could expect reductions and concessions if their risks had not already achieved the lowest possible price. It also predicted that rates in the property market would remain soft as underwriters priced aggressively to win business.
A senior market source said: “It seems ridiculous to go out and publicly offer discounts of this size, in this time when insurance companies are struggling to make money and where property insurance is relatively at its lowest rates for some years.”
Willis declined to comment.
