Property insurance rates expected to rise: Willis Towers WatsonReprints
Property market rate increases in the low single digits for non-catastrophe exposed risks and low double digits for cat-exposed programs should continue into 2018, according to a Willis Towers Watson P.L.C. report released Wednesday.
The brokerage’s Marketplace Realities 2018 Property Update made pricing predictions of flat to up 5% for non-catastrophe exposed property; increases of 10% to 20% for catastrophe-exposed property; and increases of 20% to 25% for cat-exposed property with losses.
Jan. 1 reinsurance renewals came in on average at up between 5% and 7%, despite some predictions of steep increases in the double digits, according to the report. Treaties with heavy Caribbean and Southeast U.S. catastrophe exposures, however, were the exception with some “significant upside.”
Alternative capital was “undaunted,” according to the report, with plentiful third-party funds blunting rate increases and a sustained rise in rates. Further, the highly liquid nature of this capital may help deter the formation of new insurance companies, as was the case after the significant losses suffered after the Sept. 11, 2001, attacks and the hurricanes of 2005, the report said.
The report said 2017 will be the costliest year on record for catastrophe losses, surpassing the 2011 total of $120 billion.
“Reported carrier losses and modeled results to date have coalesced around a cat loss estimate of $143 billion for all of 2017’s events,” the report said, including hurricanes Harvey, Irma and Maria: two major Mexican earthquakes; and 250 wildfires in Northern California and 29 wildfires in Southern California.