U.S. property catastrophe rates increased at January 2001 renewals for the first time since 1994, according to Paragon Reinsurance Risk Management Services, Inc. a wholly owned subsidiary of Benfield Blanch Holdings, Inc. Rates were up an average of 7.2 percent. The last increase followed Hurricane Andrew and the Northridge earthquake. Nevertheless, property catastrophe pricing still remains below 1994 levels. The Paragon index stood at 1.73 in 2001, compared to 2.47 in 1994. The Catastrophe Price Index is a relative measure of composite domestic U.S. property catastrophe prices. It compares the average market price at each renewal date with the average market price of one year prior. The January 2001 Catastrophe Price Index is based on a sample of over 150 companies representing almost 500 treaties, and approximately 40% of estimated industry subject premium. A standardized industry distribution reflecting variation in region, company size, limits, and retentions is used to compare the price of reinsurance over time. The index reflects overall market prices separate from shifts in actual reinsurance purchased. Weights used to compute the index are adjusted periodically and will reflect changes in the distribution of market purchases over an extended period of time.
Topics Trends Catastrophe Property Pricing Trends
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