In its annual report which looks at the prospects for the US market in the year ahead it predicts a souring of the market forces that have been the cause of great competition amongst insurers could come to a head by 2011, although Willis expect them to remain in place for the next twelve months.

“While undoubtedly appreciating the windfall of softening rates, risk managers must also consider the issues of market security and counterparty risk as never before,” said Joe Plumeri, Willis Chairman and CEO. “[Insurers] should take an extra moment and consider the broadest perspective in their view of risk.”

The main highlights of the report include the view that, while the market remains soft in most lines, global bankruptcies, political instability and losses in aviation have brought on rate increases for trade credit and aviation coverage. However, estimates for cat losses seem to be coming down. New models being used in property insurance are lowering the loss estimates from natural disasters like earthquakes and hurricanes.

Willis also revealed that, as banks and financial institutes continue to struggle as 2009 draws to a close; insurers who have successfully managed their risk - and are able to document it - are being rewarded with flat renewals of premiums - and even reductions.

The report also highlighted a remedy to the one major shortcoming shared by insurance schemes that protect supply chain exposure; namely that it usually requires a physical loss to respond. It said that gap has been filled in recent months with the emergence of new forms of ‘Trade Disruption Coverage’ which have been constructed to fill the perceived void in the standard coverages.