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Insurers, brokers and buyers are expecting insurance rates to increase in the wake of recent catastrophes but the range and extent of the increases that will ultimately be pushed through remains unclear.
“Everyone is expecting a correction. You are hearing the word correction constantly,” said Cynthia Beveridge, New York-based president Aon P.L.C.’s global broking operation.
While consistent increases are yet to show in the market, insurers are talking about a 5% to 10% increase in property insurance rates, she said at the annual Insurance Executive Forum sponsored by the Illinois State University Katie School of Insurance and Risk Management held Wednesday in Chicago.
In some cases, insurers are quoting increases, but they are not always sticking, she said. “We have also seen insurance carriers pricing higher and then reducing their pricing.”
In addition to the recent catastrophe losses putting pressure on the market, property insurance prices have been declining for several years due the lack of catastrophic losses, said Charles Dangelo, New York-based president and chief operating officer of Starr Insurance Holdings Inc.
In the excess and surplus lines market, which often takes on harder-to-place risks, price increases so far have been limited to property catastrophe risks, said Tim Turner, Chicago-based chairman and CEO of R-T Specialty L.L.C., the wholesale brokerage unit of Ryan Specialty Group L.L.C.
“It’s really isolated to this 10% of the market in the cat world. We don’t see prices increasing across the board,” he said.
Pricing continues to be soft in other areas of the market, Ms. Beveridge agreed, with rates for directors and officers liability insurance, for example, continuing to decline.
A moderate increase in property rates would not necessarily be strongly opposed by commercial insurance buyers, if increases help ensure a stable market, said Jamie Sewell, Chicago-based manager, risk management and insurance of Boeing Co.
“To be candid, I think we would be supportive a small correction just for the health of the industry ... if we take any long-term view with our insurance partners, we want them to be stable and we want them to be consistent,” he said.