Hurricane Losses Stabilizing Property Rates

Hurricane Losses Stabilizing Property Rates

NU Online News Service, Oct. 5, 10:35 a.m. EDT?The slide in property insurance prices is halting due to the devastating hurricane season and rates could even rise over the short term, according to data from the operator of an online insurance agents marketplace.[@@]

"Estimated total insured losses for the 2004 hurricane season will exceed $20 billion. As a result, the property market is stabilizing," commented Marketscout Chief Executive Richard Kerr. "We expect the recent trend of property rate reductions to cease and in fact anticipate rate increases for coastal properties and offshore oil and gas operations."

Mr. Kerr also noted that insurers' total loss from hurricanes could grow further if losses applicable to Florida policyholders from Hurricanes Charley and Frances are counted as a single loss and only one deductible is applied. At this point, the application of the deductible clause is unclear, he said.

Marketscout also reported that its monthly "Market Barometer" data has shown a four percent composite p-c rate hike for September?on the same level as August. Marketscout, based in Dallas, gathers its data from 60 insurance companies representing over 300 different industries and coverage classifications, as well as 50,000 industry users.

"We expect property rates to stabilize or increase over the short term and casualty rates will continue to decrease," Mr. Kerr said. He noted, however, that aside from stabilizing property rates, rates in other lines continue to drop.

Mr. Kerr said casualty rates had continued to decrease with directors and officers and errors and omissions liability coverage experiencing the largest rate increases over the last several years, and as a result, "the decreases in the September market correction are significant."