Market softening persists, despite natural catastrophes: Willis

The commercial market remains soft, despite an up-tick of natural catastrophes, reports Willis.
“The Great Recession didn’t spark a rise in premiums, as some had expected,” wrote Joe Plumeri, Willis’ chairman and CEO, in Marketplace Realities & Risk Management Solutions. “Many now wonder if the recent upsurge in catastrophic events, from earthquakes to floods to volcanoes, will turn the market, but so far we see little sign of it.”
The report noted that upon 2009 Q4 renewals, catastrophe —or poor loss experience — accounts ranged from flat to decreases of up to 10%. These same accounts experienced increases ranging from +5 to +10% in 2009 Q3.
Losses in 2009 amounted to $26 billion, marking a decline of 50% from the $52.5 billion in losses in 2008. The commercial insurers’ experience in 2010 likely won’t be “as lucky,” the report says.
“The probability that we see [natural catastrophe] losses [in 2010] as low as those in 2009 is less than 35%,” the report quoted Thomas Hess, chief economist for Swiss Re.
“We have already seen significant events in 2010, with Winter Storm Xynthia in Europe and the earthquakes in Chile and Haiti. The industry is therefore well-advised to prepare for much higher losses.”
Losses could be three to five times what they were in 2009, Willis reported Hess saying.
“These initial loss events are not expected to move the market, but they serve as a reminder of how frail the current market conditions really may be,” David Finnis, Willis’ national property practice leader, said in the report.