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US commercial insurance rates are expected to continue firming in many lines of business and industry sectors in 2013 as above average losses, subdued investment returns, and receding reserve releases impact insurers, according to a comprehensive report published today by Marsh. However, traditional signs of a conventional hard market are not evident as price increases are not uniform, capacity is plentiful, and competition among insurers remains intense, Marsh said in its
US Insurance Market Report 2013.
Superstorm Sandy’s effect on the property insurance market will likely temper what had been a generally improving rate environment for property insurance buyers in late 2012, Marsh said. Though the full effects of the storm are still being determined, decreases in property insurance pricing generally are unlikely in early 2013.
Casualty insurance markets remain in a state of transition entering 2013, though pricing trends will likely be felt unevenly across various lines of business and client demographics. Rates for financial and professional insurance — including directors and officers liability (D&O), commercial errors and omissions (E&O), and cyber insurance — are also expected to generally increase in 2013.
“Although Superstorm Sandy will rank as one of the costliest storms in US history, it is not forcing a rapid hardening of the overall market as insurers’ capital positions were strong enough to weather the storm,” said David Bidmead, Marsh’s US CEO. “But the storm has prompted underwriters to seek clarification of certain definitions and other language in property policies. In the Northeast and other regions that they did not previously perceive to be catastrophe-exposed, property insurers are also reconsidering their underwriting approach and seeking higher rates and tighter terms and conditions.
“Many of our clients will face challenging renewals across several lines and industries in 2013, as insurers continue to adjust their pricing and coverage offered to maintain profitability. Clients that effectively differentiate themselves from their peers by providing complete underwriting submissions with accurate and high-quality data will be best positioned to secure more favorable terms, conditions, and pricing where possible.”