U.S. property insurance rates for the first nine months of 2013 dropped an average 1.1% for firms with total insured values of more than $5 billion and were down 0.1% for firms with total insured values of between $1 billion and $5 billion, according to a new report, Marsh Inc. said in a statement issued Wednesday.
Firms with total insured values of less than $1 billion paid on average 2.3% more for their property coverage in 2013, down from the first-quarter average increase of 3.5%, according to Marsh's most recent Marsh risk management research briefing, “Benchmarking Trends: Capital Surplus Affecting Property Insurance Pricing,” the company said in its statement.
“The surplus of capital among insurers and reinsurers continued to fuel overall softening in the property insurance market through the third quarter of 2013. Average property insurance rates for large companies have to date declined in 2013, despite showing a slight increase in the third quarter,” the Marsh report said.
“The current supply of capital dedicated to the global property insurance market continues to temper rate increases, even on those accounts with losses. It's a different property market than it was a year ago when Superstorm Sandy made landfall in the Northeast causing underwriters to tighten terms and conditions, restrict capacity, and raise prices,” said Duncan Ellis, Marsh's U.S. property practice leader, in a statement.
Superstorm Sandy heavily influenced the property market in the Northeast in the first half of 2013, and although the effects diminished as the year progressed, Sandy has been a major impetus behind greater scrutiny of flood exposure and the remapping of many flood zones by the Federal Emergency Management Agency, Marsh noted in the report.
“This year's natural catastrophes have not caused sufficient losses to impact the current supply of capital dedicated to global property insurance,” the Marsh report said.