The spate of catastrophic loss events witnessed in the first half of 2011 have battered insurers and reinsurers, but have not substantially altered market dynamics, new data from
Administered by Advisen Ltd., the RIMS Benchmark Survey reveals that despite losses realized from tornadoes in the United States, earthquake and tsunami in Japan, floods in Australia and earthquakes in New Zealand, average renewal premiums ebbed for three of four lines tracked. General liability, property and workers’ compensation all fell by less than 1 percent on average, while directors & officers liability policies renewed 4.5 percent lower.
Dave Bradford, Advisen EVP and editor-in-chief of the survey, said the numbers suggest that the soft commercial lines insurance market may be close to its bottom but doesn’t expect rate increases anytime soon.
“Pricing has been fairly stable in three of the last four quarters, but it is too early to declare the soft market over,” he said. “Rates may have stabilized for now, but barring major catastrophe losses, there are few signs of materially higher premiums on the horizon. The commercial property/casualty insurance market remains well capitalized, and the current sluggish economy could make it difficult for underwriters to push through rate increases.”
Frederick Savage, a member of RIMS board of directors, agreed that major catastrophe losses are necessary for a substantial market hardening. “Insurance buyers continue to benefit from a competitive insurance market, but the situation could change quickly,” Savage said. “Hurricane season is underway in the United States, and forecasters continue to call for above-average activity. One or two very large storms on top of the catastrophe losses in the first half of the year could be enough to spark higher premiums, at least for property risks.”
