Insurance buyers can expect to see falling property rates through 2014, according to the Willis report "Marketplace Realities: Innovation and Continuity." In 2013, third- and fourth-quarter rates were down more than 5% for non-catastrophe coverages, and flat to minus 5% for catastrophe policies. Projections for the second quarter of 2014 are even lower-down as much as 15% for non-catastrophe and 12.5% for catastrophe rates.
This downward trend has continued because of several factors. Topping the list is additional insurer capacity, which has been bolstered by Chinese insurers, broker facilities and capital markets. Next is a manageable loss experience-overall insured losses in 2013 totaled only $44 billion. Third is the reinsurance market, whose buyers also have experienced more options for capacity. Fourth, catastrophe modeling has generated lower loss estimates for windstorm, and finally, property insurers saw notable profitability in 2013.
Not all lines are softening, however. Those with the highest rates, with expected increases ranging from 15% to 25%, are workers compensation, errors and omissions with poor loss history, terrorism and environmental combined with casualty.