Marsh Reports Global Insurance Prices up 1.4% in Q2; Sees Further Increases

June 28, 2012

Global insurance prices are set to rise for a third consecutive quarter as the industry strives to bolster its finances after paying near-record catastrophe claims last year, insurance broker Marsh said on Thursday.

Average prices in the second quarter of 2012 were 1.4 percent higher than a year ago, having risen since September 2011, according to the Marsh Risk Management Global Insurance Index, which monitors insurance rates in 20 major countries.

The Marsh index tallies with surveys from other brokers and insurers showing average prices have risen moderately despite insured losses of $116 billion in 2011, the industry’s second-costliest natural catastrophe year on record.

Historically, insurance prices have jumped sharply in the wake of big payouts by the industry as less well-funded insurers retrench, freeing those still in the market to charge more.

Analysts say the subdued price reaction partly reflects a continued abundance of capital as investors fleeing depressed bond and equity markets put money into insurance and reinsurance instead, often through securities such as catastrophe bonds.

The biggest price increases have been in markets directly affected by last year’s catastrophes, Marsh said, with property catastrophe insurance rates rising by 30 percent in Japan, hit in March 2011 by the Tohoku earthquake.

In the United States, the world’s biggest insurance market, 60 percent of companies had to pay more for their property insurance during the second quarter of 2012, Marsh said.

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