Marsh: Rates Increase in Q4, but at Slower Pace

Property and casualty insurance rates at renewal continued to rise in the fourth quarter, but at a slower pace than the previous two quarters, says insurance broker Marsh.

In its report, “Global Insurance Market Quarterly Briefing December 2012,” Marsh says renewal rates rose 1.2 percent during the fourth quarter, compared to 1.4 percent in the second and third quarters this year.

In a statement, Dean Klisura, Marsh’s U.S. risk practices and specialties leader, says, “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.

“However, some insurers are increasing their push for rate increases.”

While the proportion of U.S. insureds seeing rate reductions on renewal fell in most lines of business this quarter, Klisura says that “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.”

In five lines of business that Marsh examined, all experienced increases for more than 50 percent of insureds. Public directors and officers coverage saw 68 percent of clients experiencing increases. Workers’ compensation had the lowest percentage of clients seeing increases: 51 percent.

The percentage of clients seeing rate decreases ran from 30 percent for workers’ comp to 15 percent for excess and umbrella.

For property all-risk, which would be the line most impacted by Superstorm Sandy, 57 percent of insureds experienced increases in the fourth quarter compared to 27 percent experiencing decreases.

Marsh says the full impact on the property market from Sandy will likely be felt during 2013’s first half.

Turning to the global property-catastrophe market, Marsh says this year’s “relatively benign loss record moderated the level of increases in many countries.”

Rate increases for Australia and Japan declined slightly after considerable hikes due to catastrophes in 2011. Third quarter rate increases were as high as 20 percent this year, but moderated to 10 percent during the fourth quarter.

Capacity remains abundant globally, Marsh says, and rates remain stable for non-catastrophe exposures, with decreases achieved for these risks in many countries. However, increases were seen in the United States and Italy.

There is growing demand for cyber insurance, says the report, with more companies entering the market. United States insurers have nearly a decade of experience in this market and rates remain “broadly flat for both privacy and data-breach insurance.”

The same can’t be said for Europe and elsewhere, where pricing is less stable. Competition is expected to lead to falling rates through 2013, the broker notes.

Errors and omission rates are being driven higher by concerns with systemic, cyber and outsourcing risks.

Directors and officers coverage for public companies is seeing rate increases in the United States while falling elsewhere.

Comments

Resource Center

View All »

Complimentary Case Study: Helping achieve your financial goals By:...

Find out how a Special Investigation Union used TLOxp to save the company money and...

Do Your Clients Hold The Right CDL License?

Learn about the various classes of CDL Licenses and the industries that are impacted by...

Integrated Content & Communications: A Key Business Issue For Insurers

Insurers are renewing their focus on top line growth, and many are learning that growth...

High Risk Insurance Coverage in the E&S Market

Experts discuss market conditions, trends and projected growth in a rapidly changing niche.

Top E-Signature Security Requirements

This white paper covers the most important security features to look for when evaluating e-signatures...

EPLI Programs Crafted Just For Your Clients

Bring us your restaurant clients, associations and other groups and we’ll help you win more...

Is It Time To Step Up And Own An Agency?

Download this eBook for insight on how to determine if owning an agency is right...

Claims - The Good The Bad And The Ugly

Fraudulent claims cost the industry and the public thousands of dollars in losses. This article...

Leveraging BI for Improved Claims Performance and Results

If claims organizations do not avail themselves of the latest business intelligence (BI) tools, they...

Top 10 Legal Requirements for E-Signatures in Insurance

Want to make sure you’ve covered all your bases when adopting e-signatures? Learn how to...

Agent & Broker Insider eNewsletter

Proven success tips and essential information to help agents and brokers grow their practice – FREE. Sign Up Now!

Advertisement. Closing in 15 seconds.