And the cats just keep on coming.
As I write this, Japan has announced its nuclear woes arising from the March tsunami are now on the level of severity with Chernobyl. Closer to home, spring storms have ripped through Iowa and other areas of the Midwest, leaving behind thousands of claims.
Pundits at Allianz are calling the first quarter of 2011 the "freak quarter," with costly floods and a cyclone in Australia, an earthquake in Christchurch, New Zealand, and March’s devastating earthquake and tsunami in Japan.
And although the first quarter of 2011 may have been an aberration, it’s safe to assume that we haven’t seen the end of disasters. Japan still trembles with minor earthquakes, hurricane season is just around the corner, and some experts are predicting even more meteorological mishaps due to an increase in solar flare activity. This frequently overlooked phenomenon is believed to have influenced the March earthquake in Japan and could spur an increase in extreme weather in 2011—not to mention the potential to disrupt the high-tech communication devices we’ve all grown so dependent on (for videos and fascinating reading on the subject, search "solar flares").
Of course, the insurance industry is anxiously awaiting the long-anticipated increase in pricing that such a spate of disasters will inevitably bring. Allianz is predicting that at least the Asian Pacific region will be subject to increased costs in property-casualty coverage.
But while the jury is still out on whether the impact on reinsurance will trickle down to the standard market in the rest of the world, analysts say a combination of factors is conspiring to make rate increases inevitable for both commercial and personal lines, possibly by the beginning of next year. Loss cost inflation (the cost of claims) will force insurers to increase rates for personal lines, said Myer Shields, a financial analyst for Stifel Nicolaus, in an analyst’s note.
Can it possibly be that the long-awaited hard market could finally be on the horizon?
On an unrelated note: It seems hard to believe it’s that time again, but American Agent & Broker and National Underwriter are gearing up for the 2011 Commercial Agency Awards of Excellence competition. It’s always a pleasure to hear about what you’re doing to succeed in today’s tough market, so feel free to share your story with the world! The deadline for us to receive your entries is July 1, so it isn’t too soon to start thinking about it. Click for rules, the entry application and information on the winners from 2005 to 2010. We look forward to hearing from you!