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U.S. property insurance rates continue to rise in fourth quarter: Marsh

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Nearly half of all U.S. property insurance renewals in the fourth quarter to date have experienced rate increases, according to data from a Marsh Inc. benchmarking survey released Friday.

Marsh's “Benchmarking Trends—U.S. Property Rates, 4th Quarter (to date, December 2011” found that 29% of clients renewed with increases between 1% and 10%, while 11% received increases between 11% to 20% at renewal, and 8% were hit with increases of more than 20%.

In the fourth quarter to date, renewal rates for all property clients increased 1.7% on average, according to Marsh. But 18% percent of all renewals so far in the fourth quarter renewed with no change in pricing, the survey found. And 21% of accounts experienced rate decreases of 1% to 10%, 8% of accounts received decreases of 11% to 20%, and the remaining 5% saw decreases of more than 5%.

Marsh noted that the property insurance market has been hit with several significant catastrophe events this year, resulting in total insured losses of more than $70 billion for the first three quarters.

“As a result, insurers are seeking to increase pricing on many accounts, notably those with recent losses or poor loss histories, or for accounts with moderate to significant” catastrophe exposures, said Marsh in its analysis. Marsh added that most of the accounts that received rate reductions at renewal have little or no catastrophe exposure or losses.

Marsh also noted that some accounts have chosen to increase deductibles, reduce limits, or otherwise alter terms and conditions in an effort to control rising property insurance costs. Those with catastrophe exposures or adverse loss experience “can consider alternative program structures to try to mitigate pricing increases by creating smaller layers to foster competition,” said Marsh.

The upward trend in property pricing was evident in the third quarter as well, when an August Marsh benchmarking survey found that property accounts experienced an overall average rate increase of 1.1%.

“While the market is not classified as ‘hard,' it is increasingly difficult to achieve cost savings, and more insureds are faced with modest increases at renewal,” said Marsh in its analysis. “Marsh recommends that all companies begin the renewal process early; consider alternative program structures, insurers, and global markets; and—most importantly—submit complete, accurate data to underwriters.”

The survey is available at usa.marsh.com.