London, 22 December 2011

Record catastrophe losses prompts two-speed insurance market: Marsh

Insurance rates continue to climb for loss-affected accounts; decreases still achievable in many lines of business

Global insurance rates continued to climb in most loss-affected geographies and classes of business in the fourth quarter of 2011, but rate decreases are still achievable in many lines of business, according to a report published today by Marsh. 

Despite record insured catastrophe losses of more than $100 billion in 2011, capacity in the global insurance market remains plentiful and across the board rate rises are not being seen, according to Marsh’s Global Insurance Market Quarterly Briefing: Q4 2011.

Insurers, however, are responding to the record losses by seeking rate increases on accounts with significant losses and catastrophe exposures. For example, almost half of Marsh’s U.S. property insurance clients experienced rate increases at renewal during the second half of 2011, compared to 31 percent in the first half.

While most of those rate increases were applied to programmes with catastrophe exposure, accounts with little or no such exposure or losses were often able to secure rate decreases during the second half of the year.

“The global insurance market remains well-capitalized and generally competitive,” said Dean Klisura, U.S. Risk Practices Leader, Marsh. “This year’s record catastrophic losses are resulting in price firming around catastrophe and loss-driven accounts, but there has been no overall change in market pricing. Market fundamentals remain generally strong.”