Large catastrophe losses and the prospect of poor investment returns are paving the way for much tougher market conditions for commercial property insurance buyers, according to a new report
The new report — the Lockton Market Update — provides a snapshot of market conditions in key commercial insurance markets including commercial property and property catastrophe markets in the U.S. and globally.
Insurers “have put the brakes on price reductions in the property catastrophe market and are raising rates as they reduce capacity,” says Jim Rubel, director of property and energy insurance for Lockton in New York in his report. “For catastrophic risks, market conditions are now difficult, meaning that buyers could face dramatic price increases. Even so, this is not yet a true hard market, where capacity is not available at any price. It may not take much more, however, to trigger a hard market.”
Rubel says that the transition away from the soft market conditions of the last several years continues to develop and is tied to a sharp increase in catastrophe losses.
“There will, of course, be regional exceptions: Asia, for example, where the market can be expected to remain highly competitive, and the U.K., where the absence of any direct catastrophe exposure is a moderating factor,” says imon Scholfield of Lockton’s London-based property insurance team.
Schofield says that other markets are seeing more dramatic price increases.
“Equally, certain markets such as food manufacturers and habitational accounts have seen rates increase more significantly due to localized loss experience.”
The Lockton Market Update is available free at: http://www.locktonmarketupdateblog.com/lmu/