|[January 30, 2013]
Further Firming Expected in US Commercial Insurance Market in 2013: Marsh
NEW YORK --(Business Wire)--
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 dat will be
best positioned to secure more favorable terms, conditions, and pricing
Marsh's annual US Insurance Market Report provides detailed
information on commercial insurance market trends and risk issues for
all major classes of business and more than two dozen industry and
specialty lines. Other major findings from the report include:
Insureds with significant catastrophe exposures renewing programs in
the fourth quarter of 2012 typically saw property rate increases of 5%
The general liability insurance market was generally stable in 2012,
with some moderate firming. Rates at renewal in the fourth quarter
typically ranged from 5% decreases to 5% increases.
Workers' compensation rates generally renewed in the range of 5%
decreases to 5% increases in the fourth quarter, with rates generally
expected to increase more in 2013.
After a decade of steadily declining rates, the D&O insurance market
entered a state of transition in the second quarter of 2012. Pricing
at renewal in the fourth quarter was typically flat to up 10% for
publicly traded companies and flat to up 15% for private companies.
Many insurers appear likely to continue seeking rate increases in 2013.
Driven primarily by an increase in frequency and severity of claims,
commercial E&O and cyber insurance rates began trending upward in
2012. Rates for both lines were typically flat to up 5% in the fourth
quarter and are generally expected to continue to climb in 2013.
Although conditions in the political risk market remained generally
stable, pricing increased in some countries in the Middle East and
North Africa at the end of 2012; this trend appears likely to continue
in 2013. Conditions in the US trade credit insurance market are
expected to continue to favor insureds despite concern about the
European sovereign debt crisis and other global events.
a global leader in insurance broking and risk management, teams with its
clients to define, design, and deliver innovative industry-specific
solutions that help them protect their future and thrive. It has
approximately 26,000 colleagues who collaborate to provide advice and
transactional capabilities to clients in over 100 countries. Marsh is a
wholly owned subsidiary of Marsh
& McLennan Companies (NYSE: MMC), a global team of professional
services companies offering clients advice and solutions in the areas of
risk, strategy, and human capital. With over 53,000 employees worldwide
and annual revenue exceeding $11 billion, Marsh & McLennan Companies is
also the parent company of Guy
Carpenter, a global leader in providing risk and reinsurance
intermediary services; Mercer,
a global leader in talent, health, retirement, and investment
consulting; and Oliver
Wyman, a global leader in management consulting. Follow Marsh on
Twitter (News - Alert) @Marsh_Inc.
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