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U.S. insurance market remains stable: Marsh midyear report

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NEW YORK—Noting evidence of a “potential market shift” in some areas of property insurance, a midyear market update from Marsh Inc. says the overall U.S. insurance market has remained stable in the first half of this year.

The New York-based brokerage noted that the impact of catastrophe losses during the first six months of the year have been felt mainly by property insurers, “which appear to be transitioning from the soft market cycle of the past several years.”

Still, the report released Tuesday noted, “even among property insurers, competition and capacity remain high, meaning that insurers with little or no cat exposure have been able to achieve rate reductions, although smaller than had been typical over the past few years.”

In addition, “challenges are beginning to be felt for some insureds in parts of other lines of business, including primary casualty and workers compensation,” according to the analysis.

Increased underwriting discipline

Marsh noted that insurers are applying increased underwriting discipline in all lines of business and are trying to hold or increase rates. In the property market, the outlook for the market into 2012 will depend on the extent of catastrophe losses through the rest of this year, the broker said. Buyers with loss-driven programs or significant catastrophe exposures saw rates increase up to 15% in May and June, Marsh said, while buyers with moderate or no catastrophe exposures saw flat to modest increases or decreases.

On the casualty side, buyers with difficult loss profiles or adverse loss experiences are beginning to face challenges, as are buyers in certain classes of business and some workers compensation markets.

Most U.S. directors and officers programs remained flat or experienced slight decreases at midyear, Marsh said, while the market for cyber liability insurance remained competitive, with rates decreasing 2% on average in the second quarter.

The Marsh report, “U.S. Insurance Market 2011 Midyear Update,” is available with registration at www.insurancemarketreport.com.

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