Aon: Some P-C Carriers Now Drop Rates
NU Online News Service, April 7, 11:22 a.m. EST?Reversing recent pricing trends, rates for some U.S. property insurance are beginning to decline because of insurers' emphasis on meeting target levels of premium growth, according to a report released today by a brokerage firm.
Chicago-based Aon Corp.'s findings were made public at this year's RIMS (Risk and Insurance Management Society) 41st annual conference in Chicago.
The Aon 2003 U.S. Property Report, which includes an informal survey of buyers and sellers of insurance for U.S. property, found that the main reason for this rate decline is the growing competition for business from increased and new capacity in three main markets–the United States, London/Continental Europe and Bermuda.
Commenting on declining rates for some U.S. property insurance, John Turner, Chairman of Aon's U.K. Global Risks division, said the U.S. property market appears to be bucking the trend with a noticeable flattening in insurance premium rates in 2003.
"Most insurers globally are battling fiercely with declining investment rates and the need to boost loss reserves, which is keeping rates high across most classes of insurance business," Mr. Turner said. But U.S. property, however, is benefiting from an influx of new capacity, which is competing for business and, for some clients, bringing rates down.
"Our survey of Aon clients and insurers has found that buyers of U.S. property insurance are still mainly occupied by price," added Gary Marchitello, managing director of Aon's national property syndication in the United States, "and have welcomed the introduction of new capacity. The long-term solvency of insurers continues to be an issue of great concern, however."
The Aon report also found that the Terrorism Risk Insurance Act has so far met with mixed reaction from insurers and buyers, the brokerage stated.
"Interestingly, the introduction of the U.S. Terrorism Risk Insurance Act has met with mixed reviews from both insurers and clients, many of whom see it as inadequate in its coverage," said Gary Marchitello, managing director of Aon's national property syndication in the United States.
© Arc, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to TMSalesOperations@arc-network.com. For more information visit Asset & Logo Licensing.