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31 July 2014
The soft market is over for catastrophe-exposed property in the US, according to analyst MarketScout.
In its March Market Barometer the company says that rate cuts are beginning to moderate, particularly in workers’ compensation and catastrophe-exposed property.
“It looks like the soft market from 2005 to 2011 will end with workers’ compensation and catastrophe-exposed property risks leading the way out,” MarketScout CEO Richard Kerr said.
The company says that workers’ compensation rates have been firming for the past six months, with rate increases already occurring in some US states.
Catastrophe-exposed property risks are receiving rate increases of 2-5%.
The overall composite rate across all classes of business in March was -4%, compared to -5% for the past four months.
“We have finally broken out of the doldrums,” Mr Kerr said. “Rates are moving. Workers’ compensation, property, business interruption, small commercial, general liability and auto rates adjusted in March.”
Broker Jardine Lloyd Thompson (JLT) has also identified the development of a “two tier” market, with business not exposed to catastrophe risks likely to remain competitive, but rates rising for catastrophe-exposed business.
Christopher Tabbitt, head of placement and servicing in JLT’s specialty division in London says some insurers are resistant to entering into long-term deals, while some Lloyd’s underwriters are reducing their capacity allocations for catastrophe business.
Business Insurance magazine reports Mr Tabbitt saying the market is “on the cusp” of hardening in some areas.
JLT says rates for the Australian market have hardened, while reinsurance treaties that include Japanese earthquake risk rose by up to 50% at the April 1 renewals.
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