Global Insurance Rate Firming Slowed in Q4, Despite Sandy

  Global Insurance Rate Firming Slowed in Q4, Despite Sandy

         US East Coast Storm Not Expected to Be Market-Changing Event

Business Wire

NEW YORK -- December 19, 2012

Global insurance rates continued to firm in the fourth quarter of 2012, but at
a slower rate than in the previous quarter, despite the mounting cost to the
insurance industry of Superstorm Sandy. The Marsh Risk Management Global
Insurance Index, a composite or weighted average of rate change activity over
the preceding four quarters in major lines of insurance business, rose
slightly to 101.2 from 100.9 in the third quarter. The index was based at
100.0 in the second quarter of 2012.

Figures also published in Marsh’s Global Insurance Market Quarterly Briefing
show that the average rate change at renewal was a 1.2% increase in the fourth
quarter, compared to the 1.4% seen in the third quarter. While property rates
continued to rise, the rate of increase continued to flatten for the second
quarter in row. Rates for financial and professional lines continued to rise,
with the average renewal showing a 2.2% increase year-on-year.

Financial institutions in the US, Europe, and Australia continued to see rate
increases in their liability insurance programs during the fourth quarter,
reflecting insurers’ concern about the global economic situation and increased
regulatory scrutiny.

Dean Klisura, Marsh’s US Risk Practices and Specialties leader, said: “While
Superstorm Sandy caused some insurers to suffer significant losses, we do not
expect it to be a market-changing event. Insurers remain well capitalized with
most of them unlikely to reduce their capacity in 2013.

“However, some insurers are increasing their push for rate increases. The
proportion of US insureds seeing rate reductions on renewal fell in most lines
of business this quarter. US insureds will find it increasingly difficult to
secure rate decreases for property insurance in early 2013. This is especially
true for those with losses from Sandy. Flat or declining premium rates at
renewal typically are likely to be reserved for insureds with favorable loss
histories and low catastrophe exposures.”

About Marsh

Marsh, a global leader in insurance broking and risk management, teams with
its clients to define, design, and deliver innovative industry-specific
solutions that help them protect their future and thrive. It has approximately
26,000 colleagues who collaborate to provide advice and transactional
capabilities to clients in over 100 countries. Marsh is a wholly owned
subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global team of
professional services companies offering clients advice and solutions in the
areas of risk, strategy, and human capital. With over 53,000 employees
worldwide and annual revenue exceeding $11 billion, Marsh & McLennan Companies
is also the parent company of Guy Carpenter, a global leader in providing risk
and reinsurance intermediary services; Mercer, a global leader in talent,
health, retirement, and investment consulting; and Oliver Wyman, a global
leader in management consulting. Follow Marsh on Twitter @Marsh_Inc.

Contact:

Marsh
Sally Roberts, +1 303-952-9453
sally.roberts@marsh.com
or
Anand Poola, +1 212-345-4292
anand.poola@marsh.com
 
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