U.S. property insurance rates may rise up to 10%: Aon unit
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U.S. property insurance rates are expected to increase up to 10% in the first half of this year, Aon Risk Solutions said Thursday.
Global catastrophe losses totaled $65 billion in 2012, with October's Superstorm Sandy contributing $25 billion in insured losses, the unit of London-based Aon P.L.C. said in its 2013 “U.S. Insurance Market Overview” for property insurance.
While rates in 2012 were on average 2.8% higher than 2011, property rates in the fourth quarter of 2012 had limited impact from Sandy as many accounts had already renewed before the storm's effect was understood by the market, Aon said.
But for the first half of 2013, Aon expects the majority of accounts to see average rates ranging from flat to up 10% due to “lingering” effects of Sandy. Accounts with larger windstorm exposures and those affected by Sandy may see greater increases.
In 2012, most accounts purchased similar or higher limits, and limit availability will be adequate in 2013, Aon said. However, flood limits will be more “cautiously offered by property insurers.”
Capacity remained stable last year and is expected to remain adequate throughout this year, according to the report.
While insurers have not reacted with any substantive changes in property coverage despite large losses in 2011 and 2012, “contingent business interruption and flood were the coverage areas where the majority of change/restrictions materialized,” Aon said.
“We anticipate continued negative pressure for flood and CBI coverage,” Aon said. “Some insurers will endeavor to make some changes to definitions of windstorm and flood along with deductible clarifications.”
