2011-09-30
By staff reporter
While catastrophe-exposed risks experienced tough insurance market conditions, pricing decreases in other lines of business fostered a stable rate environment over the last three months, according to Marsh.
Overall, despite significant insurance losses in the first half of the year, insurers have remained competitive but cautious.
Dean Klisura, Marsh's US Risk Practices Leader, said: “Across lines of business, insurers priced risks competitively and retained a healthy appetite for new business. Although rates remained relatively stable, reductions were common in many lines. The size of global insurance market capacity remains very strong, but is more challenged in loss-affected regions.”
The effect of losses earlier this year meant that even property programmes not affected by losses – but with catastrophe exposures – typically renewed with increases of up to 10%; non-catastrophe exposed programmes generally renewed flat. Insurance programmes affected by losses also were more likely to experience rate increases.
In Japan, rates continued to rise significantly. On Japanese insurance programmes with losses, rate increases were as much as 50%. On programmes without losses, rates typically increased by 20%. For renewals in Australia, which suffered from flooding losses earlier in the year, increases of up to 5% were generally seen on programmes without losses and not involved in mining.
Globally, most casualty business renewed either flat or with small decreases, says the broker's Third Quarter 2011 Market Update. For example, the North American casualty market remained predominantly flat. In liability lines of insurance, rates decreases were common. For directors and officers (D&O) liability insurance almost all major markets, with the notable exception of China, reported declining rates. Likewise, rates for professional indemnity insurance and for liability cover for financial institutions reduced in almost all major geographies.
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