Rates for U.S. property insurance have begun to drop as insurers compromise to meet their target levels of premium growth. This was one of the main findings from a report published by Aon 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 both buyers and sellers of insurance for U.S. property, found that:
Insurance premium rates are beginning to fall for some U.S. property risks. Increased and new capacity in the three main markets – U.S., London/Continental Europe and Bermuda – is resulting in growing competition for business and is beginning to drive rates down.
The introduction in the U.S. of TRIA (Terrorism Risk Insurance Act), has met with mixed reaction from both insurers and buyers.
Commenting on the report, John Turner, chairman of Aon’s UK 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. U.S. property, however, is benefiting from an influx of new capacity, which is competing for business and, for some clients, bringing rates down.”
Gary Marchitello, managing director of Aon’s National Property Syndication in the U.S. commented: “Our survey of Aon clients and insurers has found that buyers of U.S. property insurance are still mainly occupied by price, and have welcomed the introduction of new capacity. The long term solvency of insurers continues to be an issue of great concern, however.”
“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,” Marchitello added.