U.S. property insurance rates are showing signs of softeningpartly due to increased capacity including growing interest fromChinese insurance companies, says an executive from Marsh. However,Chinese carriers' willingness to pay claims in the face of a majorloss event has yet to be tested.

During a webinar, “Midyear2013 Insurance Market Update,” Duncan Ellis, Marsh's U.S.property practice leader, says carriers continue to push for rate,but increased competition and capacity, as well as the lack ofa major loss through the first half of this year has translatedtranslates into rates being “flat or down in many cases.”

Carriers are still obtaining increases on select exposures, butin the single digits—“even in the traditional catastrophe-exposedregions,” Ellils adds.

On a global scale, there is growing property insurance capacityin the Middle East, Asia and China. Ellis says this growth willbenefit the U.S. as Chinese insurers look for greaterdiversification of their capacity. He says Chinese carriers willinitially seek U.S. placements with “marquee accounts” that theyunderstand, but will need to be fronted by domestic carriers untilthey have established themselves. He says there is no doubt thatthe carriers have the economic wherewithal to pay claims. The onlyquestion is how wiling they are to do so after a significantevent.

“Based on their commitment to the North America marketplace, Iwould find it hard to believe that they would shy away from theirfirst opportunity to pay some significant claims and to get a morepositive foothold in the minds of the insured in the UnitedStates,” says Ellis.

Discussing the casualty market, Marsh's U.S. Casualty PracticePrimary Practice Leader, Tracey Caffrey-Ant, says there is plentyof capacity in the market and carriers continue to push to getrate. The market is experiencing increases ranging from flat to up5 percent. However, the best accounts are able to reduce theirrates when they go out to market. Workers compensation remains“tough” and subject to negotiation as clients search for ways toreduce losses in the face of medical cost increases and an agingworkforce producing more claims.

Marsh's U.S. Excess Casualty West Zone Leader, Chui Yuen, saysrates in the Excess market have not changed since the beginning ofthe year running flat to single digit increase. Energy, chemicaland life sciences and insureds with significant losses areexperiencing higher increases. U.S. and London carriers areoffering more capacity, but it is too early to tell if this willcreate more competition and drive rates downward.

LouAnn Layton, Marsh's U.S. FINPRO Practice Leader, saysdirectors and officers coverage is experiencing average increasesas high as 6 percent depending on layer of coverage and size ofaccount. One major cause of loss is the legal cost concerningmerger and acquisition activity that appears to be on the increase.Carriers are refining language and reviewing the insured's riskprofile. Increases on D&O for private and small companies areoutpacing public companies, running as high as 10 percent primarilybecause of increases in employment practice and anti-trustclaims.

Turning to cyber risk, Robert Parisi, Marsh's Network Securityand Privacy Practice leader says rates remain flat and competitiveand new buyers are finding the coverage reasonable when compared tothe potential loss they can face. One major area of concern forinsurers is computer security around a company's use of thirdparties. Insurers and insured are working to get favorable pricesfor this exposure while improving the security around thisrisk.

With all the political upheaval that is occurring in developingcountries, for example Egypt, Brazil and Turkey, Stephen Kay,Marsh's U.S. Political Risk Practice leader. advises that companieswith interests in those regions need to understand that a new eraof volatility has erupted. He cautioned that traditional propertyand terrorism insurance would not be sufficient to cover theirassets in these regions. He advises that the chief executives ofthese companies need to consider political violence coverage thatwill cover acts of war and the like which are excluded under otherinsurance policies.