It is not yet a hard market, where capacity is not available at any price. However, it has become a very difficult market for buyers of property-catastrophe insurance- a market where capacity is available, but only at a price.
Catastrophe losses have played a significant role in the market shift.
Insured catastrophe losses totaled $105 billion in 2011, according to Munich Re, making it the costliest year ever and exceeding the 2005 record loss of $101 billion.
The largest loss for the year was the earthquake and tsunami in Japan, with insured losses of as much as $40 billion. Other significant losses included tornadoes in the U.S., with insured losses estimated at $25 billion, and floods in Thailand, with insured losses estimated at $10 billion.
As a result of these catastrophes, the insurance industry turned in its worst underwriting performance since 2002. The combined ratio, a key measure of underwriting profitability, deteriorated to an estimated 107.5 from 101 in 2010, according to A.M. Best.