U.S. commercial insurance rates are expected to climb across many lines of business in 2012, continuing a trend that began in the second half of 2011, according to a comprehensive report published in late January by Marsh.
Substantial catastrophe losses and reduced investment returns prompted many U.S. insurers to seek rate increases in 2011, most notably in the property market, Marsh said in its report, Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012. Property insurance rate increases are expected to accelerate in 2012, especially for insureds with significant catastrophe exposures or loss histories, it notes.
There are also signs of rates firming in the primary and excess casualty insurance market. This is especially true for lead umbrella coverage, where participating insurers have been seeking mid- to high-single-digit rate increases across a wide range of industry groups due to unprecedented losses. Financial and professional rates, including for directors and officers (D&O) liability, are expected to firm modestly in 2012, although rate decreases are still achievable.
"Entering 2012, the U.S. insurance market has continued the trajectory developed during the fourth quarter of 2011 and is now in an obvious state of transition," said David Bidmead, Marsh's U.S. CEO. "Although not classified as a 'hard' market, increasingly consistent signs of market correction are prevalent.
"Carriers are expected to be extremely disciplined in their underwriting and seek rate increases where they can. Those insureds that are able to provide carriers with complete, accurate, and quality data will be best positioned to navigate a changing insurance market and effectively differentiate themselves from others seeking critical capacity for catastrophe risks."
Major findings in the Marsh report include:
Marsh's annual U.S. Insurance Market Report, which provides detailed information on commercial insurance market trends and conditions for all major classes of business and more than two dozen industry and specialty lines, is available at http://imr.marsh.com.
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