In the beginning of 2012, all signs seemed to be pointing to an impending hard market shift in the property/casualty market. But while prices have been firming throughout the year, the overall market remains mixed, according to insurance broker Willis’ “Marketplace Realities 2013” report. Until Hurricane Sandy, 2012 was a year of recovery for the property insurance sector with losses far below those of 2011.
This relatively light loss year had resulted in increased policyholder surplus and abundant capacity and was expected to keep rates for catastrophe-exposed risks flat. But with insurers now facing an estimated $20 billion in Sandy-related losses, these rates could increase by 5% or more. Non-catastrophe exposed risks, on the other hand, could see decreases of up to 5%.
Meanwhile, rates in the casualty market are increasing on an average of 3% to 7.5%, with workers compensation rates seeing the largest spikes (particularly in New York, Florida and California where prices could increase as much as 20%).
The report also indicates that the rates for employee benefits and certain executive risk programs, such as directors and officers, errors and omissions, and employment practices liability, will range from flat to as much as a 10% increase, while cyber-risk insurance is expected decline as much as 3%.