June 1, 2007 by Canadian Underwriter
The terms and conditions for both cat risks and non-cat risks in the global property insurance market are changing more rapidly than many would have anticipated a year ago, says a recent Willis Group Holdings Ltd.s property alert.
In Willis Property Alert: A Tale of Two Evolving Markets the broker reviewed natural catastrophe losses over the last few years combined with projections for the forthcoming hurricane season.
The result is that outside catastrophe prone areas, the market is soft, with traditional markets and new ones chasing premium down while broadening coverage, says a Willis statement.
In catastrophe prone areas, its not soft yet particularly where the total catastrophe risk capacity required by a given insured dampens competitive market forces.
Shortages of capacity for coverage against hurricanes, floods and earthquakes still exist, Willis warns.
Those insurance buyers who suffered hurricane and storm surge damages in 2004-2005 are beginning to get relief, but the speed with which pricing has changed for these buyers since the beginning of the year is inconsistent: some renewals are flat; some have decreased 5 to 25%; but only a very few have experienced increases.
Again, the largest reductions occur where the most vigorous competition can be generated but even then, the pricing is well above pre-2006 levels, the report found.