The drive to maintain market share heated up among the bond insurers in the first half of 1994, creating a premium competition that may have negative effects in the long run, industry sources say.

Prices for bond insurance in the first six months of the year dropped by about 12% overall from 1993 levels. In some sectors, such as general obligation and utility bonds, insurance rates dropped by 16% to 17%, according to Fitch Investors Service.

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