Record-setting catastrophe losses from 2011 are contributing to a hardening property/casualty market, according to the latest market update from Lockton.
The 2012 Lockton Market Update predicts that CFOs and risk managers are going to face a difficult pricing environment in coming months as prices for many risks are flat and commercial insurance buyers are battling rising prices and pressure to improve underwriting.
Lockton’s EVP Jim Rubel noted that the market is not yet hard; however, it has become challenging for buyers: “a market where capacity is available, but only at a price.”
In the report, Lockton’s casualty experts Jesse Olsen and Stacy Seaburg expressed similar sentiments. “Although casualty insurance capacity is still strong, its impact on pricing continues to fade,” the report stated. “Instead, carriers are focused on return on capital.” Thus, with that shift in focus, insurers are attempting to raise prices and stiffen underwriting guidelines.
While this can make renewal decisions more difficult, Rubel recommends beginning the renewal process early and providing underwriters with sufficient detailed information to mitigate price increases.
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