According to figures released by Marsh “insurance premium rate reductions slowed for property and casualty business across Europe, the Middle East and Africa in the first half of 2009.”
Marsh also concluded that even though the increasing number of claims being filed has put pressure on rates, “competition between carriers and plentiful capacity are still the dominating downward drivers of rates in most markets.”
Bruce Trigg, Leader of Marsh’s Risk Management Practice in Europe, the Middle East and Africa, noted: “As clients look to manage their way through the economic downturn, they are reducing the sums they insure in an effort to cut costs where possible, potentially leaving them underinsured. This has resulted in premium reduction and increased capacity in the market.
“This means that the overall insurance marketplace remains competitive, especially in countries that have a developed insurance market. Capacity is largely unchanged and insurers’ appetite for risk remains. However, as claims rise, insurers are beginning to negotiate more aggressively on renewals, as previous rate reductions were unsustainable.”
Marsh’s figures also show that P/C insurance classes are still experiencing some rate reductions, but certain sectors, notably those that have been heavily impacted by the current economic climate, such as financial institutions and trade credit, have seen rate increases. Loss ratios in all classes of business have increased.
“Companies across Europe, the Middle East and Africa are focused on keeping their insurance spending low,” Trigg continued. “However, if current claims trends continue, companies should prepare themselves for possible rate increases during the rest of this year. Our clear message to clients is that, since underwriters are placing increased importance on good risk management, the better a company manages its risks the greater the chance of avoiding significant premium increases.”
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