Market still abundantly capitalized, despite record 2011 Q1 losses

The insurance market is still abundantly capitalized, keeping a hard market at bay despite record cat losses in the first half of 2011, said Brian C. Elowe, Marsh’s managing director of global risk management.
Elowe was as a panel member during the 2011 Risk and Insurance Management Society’s Benchmark Survey Webinar, produced by Advisen Ltd.
According to findings from the RIMS benchmarking survey, nothing on the horizon suggests an imminent market hardening. But the market may be scraping the bottom of the cycle, Elowe said. Rather than industry-wide premium hikes, insureds going to market can expect pricing adjustments in certain pockets or lines.
“Certainly clients that have big losses and huge cat exposures are having at one end of the spectrum some adjustments in property premiums,” he said. “And at the other end of the spectrum, you have some insureds with no cat exposures and still enjoying flat to reduced premiums year-over-year.”
Looking at casualty lines, market fundamentals point to a need for a tightening of rates, but abundant capacity is keeping the rates competitive, Elowe observed.
“What’s important to understand here is that despite the fact that we’re going through some minor and sometimes major pricing adjustments, a hard market has to be coupled with a change in capacity,” said Elowe.
“We just don’t see any major changes in capacities, even in the tough cat exposure areas. Putting programs together at the capacity that’s necessary is still readily doable, albeit there might be some pricing adjustments.”