While catastrophe-exposed risks experienced tough insurance market conditions, pricing decreases in other lines of business fostered a stable rate environment over the last three months, according to Marsh’s Insurance Market Update Third Quarter 2011.
Overall, despite significant insurance losses in the first half of the year, insurers have remained competitive but cautious. Marsh, the world’s leading insurance broker and risk advisor, is a wholly-owned subsidiary of Marsh & McLennan Companies.
“Across lines of business, insurers priced risks competitively and retained a healthy appetite for new business," says Geoff Lambrou, Managing Director and Head of Placement for Marsh in Asia.
"Although rates remained relatively stable, reductions were common in many lines. The size of global insurance market capacity remains very strong, but is more challenged in loss-affected regions.”
The effect of losses earlier this year meant that even property programs not affected by losses – but with catastrophe exposures – typically renewed with increases of up to 10 percent; non-catastrophe exposed programs generally renewed flat. Insurance programs affected by losses also were more likely to experience rate increases.
In Japan, rates continued to rise significantly. On Japanese insurance programs with losses, rate increases were as much as 50 percent. On programs without losses, rates typically increased by 20 percent.
For renewals in Australia, which suffered from flooding losses earlier in the year, increases of up to 5 percent were generally seen on programs without losses and not involved in mining.
Globally, most casualty business renewed either flat or with small decreases. For example, the North American casualty market remained predominantly flat.
In liability lines of insurance, rates decreases were common. For directors and officers (D&O) liability insurance almost all major markets, with the notable exception of China, reported declining rates. Likewise, rates for professional indemnity insurance and for liability cover for financial institutions reduced in almost all major geographies.
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