NU Online News Service, June 4, 2:35 p.m. EDT

Insurance rates are on the rise, but the pace of increases is not the same across the board, and some lines that showed aggressive upward momentum earlier are beginning to slow, according to an analyst's report.

Meyer Shields, an analyst with Stifel Nicolaus, says property-catastrophe rate increases are beginning to slow, indicating that there is ample supply in the reinsurance market to meet the high demand for coverage.

Commerical Casuality Chart Shields says there are reports that property-catastrophe renewal pricing was “less positive than many expected.”

As an example of the high reinsurance capacity for property catastrophe coverage, Shields says Validus and others have capitalized special-purpose reinsurer AlphaCatRe 2012, Ltd. for $70 million. The reinsurer will write single-limit lower-layer Florida wind risks underwritten by Florida-domiciled insurers.

Additionally, Shields says Renaissance Re formed Timicuan Reinsurance III Ltd. with $55 million and two RenRe subsidiaries will cede Florida wind risk.

Regarding commercial lines, Stifel Nicolaus says rate increases for workers' comp, commercial auto liability, commercial multiple peril and product liability should continue to gain traction as underwriting profits deteriorate.

For workers' comp, the report says loss trends are gradually showing deteriorating performance, and additional adverse development is expected in the coming year.

Commercial multiple peril is described as “volatile” due to catastrophe losses from 2009 to 2011.

While a small line of business, product liability has been unprofitable and continues to display a “consistent track record of overall adverse development and deteriorating immediately-prior accident-year development.”

But other commercial-lines coverages are showing improves results, which may mean a slower pace for rate increases, Stifel Nicolaus says.

The report notes that “other liability results improved modestly in 2011, which will probably postpone aggressive rate increases, while medical malpractice apparently has a way to go.”

Contrary to the deteriorating performance of other lines of business, medical malpractice outlook “remains very positive.”

The “accident year loss picks remain very stable [for med mal], and there has been only the faintest hint of declining prior-period reserve releases,” the report notes.

Special Reports /

Property Catastrophe Rate Increases Slowing, Analyst Says

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