Profits held by some will prevent price rises by others, EMB claims
Commercial property insurance rates are unlikely to see any significant rise in the near future, despite some insurers’ attempts to gain rate increases, according to actuarial consultancy EMB.
The firm’s analysis of London market players found that, while some property insurers do need price increases, a reasonable proportion of the market is already making appropriate returns on their underwriting. “The market is not going to move just because some commercial property insurers want it to,” said EMB director Mike Hood. “Many of their competitors are achieving profits and do not need to hike up prices, making it impossible for the rest to go it alone.”
EMB said there was almost a 20-point spread in underwriting performance between the strongest performing and weakest groups of insurers during 2009 and over the previous five years. It highlighted a better use of data, superior risk selection and more effective purchase of reinsurance as the main differentiators. “Overall, the property market had a good year in 2009 and, even though the first quarter of 2010 was very difficult for some, there probably isn’t enough pressure to generate a material increase in rates,” Hood said.