Buyers Find Property Insurance Available, But at a Higher Price

Posted by on April 24, 2012 | Be the First to Comment

After a year of heavy catastrophe losses and growing concerns about increased risk exposures, property-catastrophe insurers have been raising prices and reducing capacity.

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.

Read the full report here.