Posted on 10 Jun 2011
At Standard & Poor's annual insurance conference in New York, reinsurance executives on Thursday said that recent costly natural disasters, which have triggered a rise in property insurance rates, haven't brought about such an increase in the price of casualty coverage.
Casualty rates aren't likely to improve, they said, until the companies selling the coverage experience substantial losses from those lines of coverage, which include environmental risks and workers' compensation. Such an improvement is a year or more away, they said.
"There isn't enough pain to see a turn" in the pricing cycle, said Chris O'Kane, chief executive of Aspen Insurance Holdings Ltd. (AHL).
Still, rates have largely ceased declining, O'Kane said.
"Not many people are talking about price reductions," he said. "That's last year's negotiation."
While American International Group Inc. (AIG) has taken billions in charges in recent months to bolster reserves in its asbestos, workers' compensation and liability books, other insurers haven't followed suit in a substantial way.
The price of property and catastrophe coverage, however, has increased in recent months, after major earthquakes rattled Japan and New Zealand, floods submerged parts of Australia, and tornadoes caused higher-than-expected losses in the U.S.
"There is clear evidence that the market is moving up" in that sector, with Japan and New Zealand seeing some of the most substantial price increases, said Costas Miranthis, CEO of PartnerRe Ltd. (PRE). "But I don't think it will have immediate repercussion on casualty.