Overall the global insurance market continues to be well capitalised and generally competitive despite the major catastrophe losses experienced this year says insurance broker Marsh in their Second Quarter 2011 Insurance Market Update which was published yesterday.
However the heavy catastrophe experience and losses has made some insurers rethink their businesses and be more selective in how they deploy their capital. Marsh’s report finds that some insurers have withdrawn from certain catastrophe prone regions and some have withdrawn capacity from loss making lines of business.
As a result, some clients will have found their renewals tougher than normal and rate rises will have been experienced due to a lack of choice in carrier for their geographic region and line of business.
Marsh highlights the hurricane season as the major threat for the market through the remainder of 2011. The threat of a busy hurricane season combined with greater discipline in their underwriting from insurers increases the chances of a change in the market dynamic throughout the rest of 2011.
“Although there has not been an overall change in market pricing in the wake of further natural catastrophes in the second quarter–including storms and tornadoes across the United States — the global insurance market remains under pressure,” said Nick Bacon, CEO of Bowring Marsh. “Many insurers and reinsurers have already seen their 2011 budgets for catastrophe losses substantially eroded, if not exceeded. And this was before the start of the Atlantic hurricane season.”
Marsh’s report shows a lot of variation in property renewals in Q2 depending on loss records, catastrophe exposure levels, cover purchased and the quality of data submitted. Generally, Marsh says that programs with catastrophe exposure making up 25% of the insured value saw rate increases of up to 15%. Property program without catastrophe exposure continue to be competitively priced. Interestingly Marsh say they also saw the beginnings of price increases for casualty lines however they saw the D&O market remain soft.
“With rate reductions less common in certain product lines, it is important that organizations increase their engagement with underwriters to differentiate their risk profiles,” noted Dean Klisura, U.S. Risk Practices Leader, Marsh.
You can access the full report from Marsh here.