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Member, Beacon International Group, Ltd.
LONDON—While the recent string of natural catastrophes in Japan, Australia and New Zealand, among others, have not turned the insurance and reinsurance market, pockets of rate hardening are being seen London-based brokerage Jardine Lloyd Thompson Group P.L.C. said during a briefing.
For the April 1 Japanese treaty renewals, business exposed to earthquakes saw rate increases up to 50%, Mark Drummond-Brady, JLT's international chairman for risk and insurance, said during the briefing.
The Australian market also has hardened to an extent, he said.
Christopher Tabbitt, head of placement and servicing in JLT's specialty division in London, said insurance buyers can expect to see underwriters attempt to increase rates for business with catastrophe exposures.
For renewals at the end of March, there was little impact on casualty portfolios, but some underwriters have shown a change of attitude for property, he said.
For example, some insurers were resistant to entering long-term deals, Mr. Tabbitt said.
Some Lloyd's of London underwriters are reducing capacity they will allocate to underwriting catastrophe business, he added.
The market is “on the cusp” of hardening in some areas, he said.
There are signs of a “two-tier” market starting to emerge, whereby noncatastrophe-exposed business is likely to remain competitive but rates are expected to rise for catastrophe-exposed business, he said.
Underwriters also may seek to reduce the contingent business interruption limits they provide to buyers as they become more cautious about how they deploy their capacity, he said.
Insurance buyers must provide clear information about their risks and show they have conducted reviews of business interruption and supply chain risks, among other measures, to try to avoid being subjected to rate hikes, he said.
Large insured losses from catastrophes last year and this year plus the recent release of a revised windstorm model will prompt reinsurers to push for higher rates worldwide, Towers Watson & Co. said in an analysis released Tuesday.