Global insurance rates rise during third quarter: Marsh

Global casualty insurance rates and property insurance rates for American firms rose during the third quarter of this year while competition for natural catastrophe insurance is intense for mid-sized energy projects, according to a recent report published by Marsh Inc.

“Casualty insurance rates globally rose on average by 1.2% on renewal in the quarter, higher than the 0.8% increase seen last quarter,” Marsh wrote in its Global Insurance Market Quarterly Briefing October 2012. The New York insurance broking and risk management firm noted underwriters “showed caution” around risks such as the hydraulic fracturing method of extracting natural gas, cyber liability and wildfires in the U.S.

According to the Marsh Risk Management Global Insurance Index, the cost of insurance “across major lines” increased 0.9% during the second quarter.

“Property insurance rates stabilized as a lack of major losses from natural catastrophes to date this year helped keep increases to an average of 1.2% at renewal during the third quarter.”

Among U.S. clients, there were more companies with rate increases than rate decreases in the property “all risk,” general liability and excess/umbrella categories, Marsh noted.

The firm also noted that despite low catastrophe losses, property insurance rates for “natural catastrophe-exposed risks” rose in “major geographies” during the third quarter.

“This trend is expected to abate in the fourth quarter if there are no major events,” Marsh stated.

For risks other than natural catastrophes, rates “were more likely to remain stable or decline,” according to the report.

Marsh also noted that many energy projects with capital expenditures of more than US$5 billion “are now more inclined to self-insure large tranches of their program if insurance coverage cannot be found at commercially acceptable terms.

However, projects valued between US$500 million and $5 billion benefit from fierce levels of competition among insurers.”