NA non-cat programmes renew flat to +5%
North American insurance buyers can expect non-catastrophe-exposed programmes’ pricing to be flat to +5 percent, according to Willis Towers Watson’ Property Market Update.
Following 2017’s record natural catastrophe losses commercial property insurers are seeking double-digit rate hikes on catastrophe-exposed insurance programmes.
However, abundant risk transfer capacity in the form of traditional and alternative capital is dampening the potential for widespread market firming.
Organizations with catastrophe-exposed properties that have suffered losses are facing the steepest rate hikes, between 20 percent and 25 percent, while catastrophe-exposed programmes without losses are likely to see price increases of 10 percent to 20 percent.
According to the report, 2017’s global natural catastrophes have resulted in estimated insured losses of $143 billion thus far, topping the previous record of $120 billion in 2011. However, the report points to strong reinsurance market industry capitalization and the continued appetite by alternative capital providers as critical factors in helping the industry absorb recent losses without major balance sheet impairment. This scenario is also “dampening the ability of underwriters to attain significant rate uplift and will diminish the likelihood of a sustained marketplace firming,” the report said.
While market reaction is not producing rate increases as steep as initially feared, buyers still face challenges, the report noted. For example, property rate increases are expected to vary significantly from the mean, and pricing will depend on an organization’s specific exposure, loss history and occupancy. For organizations approaching insurance program renewals, “aggressive marketing” of their insurance programs may be necessary and may involve displacing incumbent insurers to attain the best rates and conditions.
The report said: “Make no mistake, the marketplace is still in a state of some flux and should not be considered easy. While the rate increases that we’ve seen and that we predict are modest compared to some initial doomsday scenarios, they are still challenging for buyers. Moreover, there is some bleeding of the market-firming into other lines of insurance, which will also challenge buyers. That said, we do not see property rate increases escalating beyond our forecasts, and we think the duration of the current conditions will likely be limited to a few quarters.”
Join us at Intelligent Automation in Insurance - London 2018. Book by Feb 28th and you could save £300.
More of today's news
Lancashire combined ratio jumps to 125% in 2017
JLT Re North America taps cyber/E&O leader from Zurich
Insurance brokers on the hook for Brexit deal
Bermuda’s MultiStrat completes casualty-linked securities deal with Storm Harbour Partners
NN Group, Delta Lloyd merger delivers €133m savings in 2017
