Risk managers have long been hoping that the soft insurance market would never end. For years, rates have been low and risk transfer has been relatively cheap. Increasingly obvious signs of a market turn have been surfacing for a while now, so the fact that rates are now hardening isn’t exactly a shock. But it is nevertheless difficult medicine to swallow. And when it comes to insuring commercial property, especially when it has natural disaster exposure, the good ol’ days are now essentially over.
A first quarter pricing report from Marsh confirms the bad news, showing that property insurance rates have increased between 10%-20% for natural-catastrophe-exposed property. Even accounts with no disaster risk are about 10%.
“In the U.S., the property market continues to be in a state of transition with insureds more likely to experience rate increases than those renewing with flat or modest rate decreases,” said Dean Klisura, leader of Marsh’s U.S. risk practices unit. “We believe that this trend will continue in the short term, with the average rate of increase continuing to rise month over month.”
As they say, everything ends badly — otherwise it wouldn’t end.