Despite the lack of traditional signs of a hard market, such as a lack of uniformity in price increases, plentiful capacity, and intense competition, U.S. commercial insurance rates are expected to continue firming, according to Marsh’s “US Insurance Market Report 2013,” as above-average losses, diminished investment returns and receding reserve releases in many lines of business and industry sectors affect insurers.
“Many of our clients will face challenging renewals across several lines and industries in 2013, as insurers continue to adjust their pricing and coverage offered to maintain profitability,” said David Bidmead, Marsh’s U.S. CEO. “Clients that effectively differentiate themselves from their peers by providing complete underwriting submissions with accurate and high-quality data will be best positioned to secure more favorable terms, conditions, and pricing where possible.”
Though the full extent of insured storm-related losses is still being determined, Superstorm Sandy will likely reverse declining rates for property insurance, Marsh said, and casualty insurance remains in a state of transition.
“Although Superstorm Sandy will rank as one of the costliest storms in U.S. history, it is not forcing a rapid hardening of the overall market as insurers’ capital positions were strong enough to weather the storm,” Bidmead said. “But the storm has prompted underwriters to seek clarification of certain definitions and other language in property policies. In the Northeast and other regions that they did not previously perceive to be catastrophe-exposed, property insurers are also reconsidering their underwriting approach and seeking higher rates and tighter terms and conditions.
Other highlights from the report:
Across various lines of business and client demographics, pricing trends likely will be felt unevenly, and rates for financial and professional insurance, such as directors and officers liability (D&O), commercial errors and omissions (E&O) and cyber insurance also are expected to increase.
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