Monday, 20 February 2012
Global property catastrophe RATES up 9.5% but casualty flat, European markets mixed—brokers
The January 2012 renewals saw reinsurance prices continue the trend of 2011, with global property catastrophe rates generally heading upwards. However, with an excess of reinsurance capacity, prices were flat or even reducing in many regions for property and casualty lines.
Nick Frankland of Guy Carpenter
“Despite the prospect of sustained low interest rates, rate movements for casualty lines continued to be subdued. Most other lines also saw moderate price changes, with increases and decreases in the single digits. Marine & energy once again saw rates increase while US surety saw a clear downward trend,” the reinsurance broker said in its Renewals 2012 report.
According to Guy Carpenter there was an average 9.5% increase in global property catastrophe rates at January 1, 2012. However, there were wide-ranging rate movements at national, regional and even local levels depending on loss experience and exposure perceptions, it said.
Many, but not all, property markets saw rate increases.
US property programmes saw average increases of 8%, but European markets were mixed.
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UK and Italian property rates were flat, but down in Switzerland and Spain—where industrial business saw its reinsurance rates fall 5–10%.
Reinsurance rates in the Nordic region were generally flat, although catastrophe prices increased significantly as reinsurers reduced capacity following the cloudburst in Copenhagen in July, 2011. Programmes impacted by the Copenhagen cloudburst loss increased by 25% to 35% in price over the 2011 terms, said Guy Carpenter.
Reinsurance rates in Germany were generally flat, although loss-affected programmes sustained rate increases of 5% to 10%, following two big storms in 2011. Cat excess of loss was flat to 5% higher at the January 1 renewal, while per-risk programmes were flat, Guy Carpenter said.
US and global property catastrophe reinsurance rates increased by 5% to 15%, as did global marine and energy. However, many lines saw reductions, according to the reinsurance broker. US workers compensation and aviation rates were flat to down 5%, while credit and political risk reinsurance was flat to 20% down.
Directors and officers and errors and omissions reinsurance price movements ranged from 5% increases to 5% decreases.
The latest version of RMS catastrophe model had little impact on European-wide portfolios, but the changes caused some issues for portfolios with high concentrations of windstorm exposures in certain regions—such as western France—and southern European earthquake.
“The impact of RMS 11 was muted for this renewal, but there is more work yet to be done in this area. However, a best practices approach is to use multiple models and for a company to take its own view. We will see insurers take a more customised approach and reinsurers buy in to that view.”
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