Global Insurance Rates Continue to Firm
Marsh finds rate increases slowing despite losses attributable to Superstorm Sandy.
Insurance Networking News, December 19, 2012
Global insurance rates continued to firm in Q4 2012, despite the insured losses attributable to Superstorm Sandy. According to the “Marsh Risk Management Global Insurance Index,” a weighted average of rate change activity for major lines of insurance over the previous four quarters, insurance rates rose to 101.2 from 100.9 in the third quarter. The index was based at 100.0 in the second quarter of 2012.
“While Superstorm Sandy caused some insurers to suffer significant losses, we do not expect it to be a market-changing event. Insurers remain well capitalized with most of them unlikely to reduce their capacity in 2013,” said Dean Klisura, Marsh’s U.S. Risk Practices and Specialties leader. “However, some insurers are increasing their push for rate increases. The proportion of U.S. insureds seeing rate reductions on renewal fell in most lines of business this quarter. U.S. insureds will find it increasingly difficult to secure rate decreases for property insurance in early 2013. This is especially true for those with losses from Sandy. Flat or declining premium rates at renewal typically are likely to be reserved for insureds with favorable loss histories and low catastrophe exposures.”
For the fourth quarter, the average rate change at renewal was a 1.2 percent increase, compared to the 1.4 percent increase in Q3, based on figures published in Marsh’s “Global Insurance Market Quarterly Briefing.”
For the second consecutive quarter, property rates also rose but at a slower rate; rates for financial and professional lines continued to rise as well, and the average renewal showing a 2.2 percent year-over-year increase.
In the United States, Europe and Australia, financial institutions continued to experience rate increases for liability insurance programs in Q4, reflecting concerns about global economic instability and increased regulation.
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