Cat-exposed rates expected to increase, but rest of market appears stable: Willis

Catastrophe losses in the first quarter, combined with a revised catastrophe model, are adding upward pressure to the soft property insurance market, according to Willis Group Holdings.
Rates for North American catastrophe-exposed property risks are expected to increase up to 5% during the second quarter, according to Willis’ 2011 Marketplace Realities and Risk Management Solutions report.
Non-catastrophe exposed property risks could still experience rate declines, the report points out.
Other commercial lines are expected to remain relatively stable in part due to abundant capacity. First quarter renewals continued to experience soft market conditions.
“However, additional catastrophe losses could impact pricing in other lines, and the market is in transition as we head into the U.S. Atlantic Hurricane season,” Willis says in a release.
“The property market is shifting, especially for catastrophic risks,” Todd Jones, president of Willis North America, writes in the report’s introductory comments.
“The overall marketplace, however, appears to be stable, and while the softening may slow, no major reversals so far are detected. This speaks volumes about the resiliency of our industry.”
He cautions, however, that if the predictions surrounding an active Atlantic hurricane season come to fruition, the market could turn for other lines, as well.
“This year, a big hit to the world’s carriers could put us over the tipping point,” he adds.