Despite record insured catastrophe losses of more than $100 billion in 2011, capacity in the global insurance market remains plentiful and across the board rate rises are not being seen, according to Marsh’s Global Insurance Market Quarterly Briefing: Q4 2011.
Insurers, however, are responding to the record losses by seeking rate increases on accounts with significant losses and catastrophe exposures. For example, almost half of Marsh’s U.S. property insurance clients experienced rate increases at renewal during the second half of 2011, compared to 31 percent in the first half.
While most of those rate increases were applied to programs with catastrophe exposure, accounts with little or no such exposure or losses were often able to secure rate decreases during the second half of the year.
“The global insurance market remains well-capitalized and generally competitive,” said Dean Klisura, U.S. Risk Practices Leader, Marsh. “This year’s record catastrophic losses are resulting in price firming around catastrophe and loss-driven accounts, but there has been no overall change in market pricing. Market fundamentals remain generally strong.”
According to Marsh’s report:
• Countries affected by major catastrophe events during the year saw the largest property catastrophe rate increases in the quarter. In Japan, programs with earthquake risks typically renewed with increases of up to 50 percent. In Thailand, where insured losses from flooding around Bangkok are estimated to be greater than $10 billion, programs are renewing with increases of up to 30 percent.
• Globally, employee benefit costs increased significantly during the quarter as a result of higher medical costs. In India, for example, employers experienced 20 percent rate increases in the quarter
• Rates for directors’ and officers’ liability insurance in large emerging markets, such as China and India continue to rise, while rates in all other major markets remain stable or are declining.