Insurance rates for global property risks are declining up to 20% despite earthquakes and storms that caused billions of dollars of insured losses in the first half of this year, a brokerage executive said Friday.
“Rates are, generally speaking, still reducing,” Nicholas Bacon, London-based CEO of Bowring Marsh, a specialist international brokerage unit of Marsh & McLennan Cos. Inc., said in a quarterly review conference call. “That’s driven, of course, by supply and demand; and there is still extra capacity coming into the marketplace.”
Rates in the London market for U.S. property risks have fallen 5% to 20% during renewals in the past 60 days, Mr. Bacon said. “If it’s a loss-active account, then it’s probably going to be renewing around about flat.”
Some natural catastrophe risks are seeing rate cuts as high as 20% if they are loss-free, Mr. Bacon said. “The reason why the cat risk reductions are greater” is because “it’s considered, still, very prime business; there’s a lot of market for it in London and the competition for it is still intense.”
Property rates in Europe generally are seeing declines of about 5%, and accounts with clean loss records might see prices cut by 10% to 15%, he said.
Insurers are competing fiercely for property accounts in Europe, but “there seems to be less earthquake capacity and windstorm capacity in local countries in Europe,” Mr. Bacon said. “That’s actually good news for London; it’s driving increased cat-only orders into the London market.”
Competition for property accounts written in Asia also is intense, with prices dropping 10% to 30%.
In addition, rates for terrorism coverage are falling as much as 20%.“We are seeing an increased demand for the coverage,” Mr. Bacon said, and multinationals are “designing their coverage” according to the type of assets they want to protect and the terrorism potential in the countries where the assets are located.
Copyright © 2010 Crain Communications, Inc.