Premium increases predicted for the new year
New capacity in the mid-market sector is keeping rates down, according to a new report from Aon.
Head of broking for Aon’s mid- to large-sized companies, Steve Redgwell, said that increased competition will keep rates at similar levels to the first three quarters of 2009. But he predicted a changing picture for next year.
“Into 2010, a combination of a continued softening market over the past five to six years, lower reserve releases and weak investment returns will lead to premium increases,” he said. “This will be at a slower pace than previously predicted.”
The broker’s quarterly index report stated: “The market remains very competitive and while rate increases have mainly been selective and imposed on poorer performing trades and risks, the view of insurers is that increases will start to show on a more general basis in 2010.”
It added that the majority of business sectors in the UK are not likely to see much change in rates for property, liability and motor insurance renewals in the fourth quarter. The survey found that 70% of underwriters are predicting motor rates to move slowly upwards during the end of 2009, but 68% and 64% expect decreases or no rate change in property and casualty insurance, respectively.
Aon also warned that insurers may reduce the amount of capital they’re willing to commit to the food industry in the fourth quarter of 2009 and into 2010. It said that only those companies that can show a constructive and proactive approach to understanding and managing risk will maintain a positive response from insurers.