Insurance rates are rising for property in high-risk areas, while rates are falling for many lines of professional insurance, leading to an overall stable market around the world, according to a report from Marsh, the brokerage arm of Marsh & McLennan.
The hottest topic at virtually any gathering of insurance executives of late is rates, and whether more than $70 billion in disaster losses around the world this year will force an across-the-board “hard market” where insurers have pricing power with customers.
But the Marsh report suggests the industry is instead seeing pockets where rates are strengthening, particularly in areas that have either suffered disasters already this year or are considered at risk.
“The effect of losses earlier this year meant that even property programs not affected by losses — but with catastrophe exposures — typically renewed with increases of up to 10 percent,” Marsh said in a summary of the report.
In Japan, the devastating March earthquake forced rate increases of 20 to 50 percent, while rates went up at least 5 percent in Australia after heavy flooding earlier in the year.
On the other hand, Marsh said rates actually fell in most of the world on many kinds of liability insurance, including directors’ and officers’ policies for public companies and liability coverage for financial institutions.
“Overall, despite significant insurance losses in the first half of the year, insurers have remained competitive but cautious,” Marsh said.
(Reporting by Ben Berkowitz) in New York; editing by John Wallace)
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