Guy Carpenter report shows global rates for property and catastrophe risks have risen by 8%
Reinsurance rates rose significantly in the January 2009 renewals.
While the full extent of the rises will not become clear until later this month, two reports released this week indicated rises of about 5% globally.
According to a report from Guy Carpenter, global rates for property and catastrophe risks have lifted by an average 8%. Globally, casualty rates increased by about 5%. However, property and catastrophe renewals went down -2.5% to 5% in the UK.
The renewals are likely to have a knock-on effect on the primary insurance market, creating pressure for higher rates.
“Price increases at the 1 January renewals have been tempered somewhat by large capital positions, which have enabled carriers to absorb the year’s losses, but the marketplace remains highly volatile,” said Chris Klein, global head of business intelligence at Guy Carpenter.
“There have been wide differences in pricing, dependent on a number of factors, such as loss history, geography, and line of business. At the same time, the expectation of another above-average storm year and the ongoing credit crisis underscore the need for disciplined capital management in the coming year.”
A separate report from Willis Re said primary insurers hoped reinsurance would preserve their remaining capital following investment losses.
It said casualty reinsurance rates increased by a maximum of 5% in the UK, but ranged between 10 and 30% in the US.
Peter Hearn, chief executive of Willis Re, said: “The unprecedented turmoil in global capital markets during the second half of 2008 has ravaged the balance sheets of many financial institutions. Reinsurers, while not currently impaired, have recognised that in the current financial market climate, obtaining new post-event capital will be both difficult and expensive.”
Simon Lovat, PI divisional director of United Insurance Brokers, said professional indemnity rates had increased by about 15%, as had been expected.