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Willis Group Holdings (NYSE: WSH), the global insurance broker, reports modest rate increases across major and specialty lines of insurance, including Casualty lines and catastrophe-exposed Property programs. The spring update to its 2012
Marketplace Realitiesreport is published by Willis today to serve as a guide for thousands of North American insurance buyers headed to the Risk & Insurance Management Society’s Annual Conference and Exhibition April 15-19 in Philadelphia.
For the Property insurance market, 2011 was a challenging year, with insured global catastrophe losses totaling $108 billion. Revisions to catastrophe modeling tool RMS 11.0 is also putting upward pressure on rates. Catastrophe-exposed accounts saw rates climb an average of 5%-10% in Q4 2011, with many accounts experiencing increases in the 10%-15% range – a trend that has continued through Q1 2012. While Willis expects rates for catastrophe risk to continue to climb throughout 2012, abundant capacity and the lingering weak economy have tempered upward pressure on a broader level.
In primary/umbrella Casualty lines, more than 75% of insureds are seeing modest rate increases on renewal, driven by gradual increases in revenues and rating exposures.
In introductory comments, Willis Chairman and CEO Joe Plumeri suggests insurance buyers taking stock of this complex rate environment take a broad perspective by looking at the change in the cost of risk transfer over the past five years.
Plumeri writes, “We asked our Marketplace Realities authors, specialists in their product areas, this question: If, in 2007, a risk cost $100 to insure, what would it cost to insure that same risk today?”
The answer, approximately $70, implies an aggregate cut in premium income of 30%, a blow the industry has for the most part absorbed successfully, Plumeri explains. “What insurers offer, what they are selling, in the end, is their own resilience.”