The latest Willis Index survey for the fourth quarter of 2005 shows that the damage caused by last year's devastating hurricanes will drive rates up for the majority of financial institutions.
The Willis Index, a quarterly survey of the insurers underwriting non-US financial institutions, asked all participants for their views on the past three and next three months.
After hurricane season hit, Willis said respondents were less optimistic than in previous quarters saying that they
anticipated an increase in prices.
Throughout 2005 the Willis Index has shown that the insurance market for financial institutions has been progressively softening.
Willis said a couple of years of comparatively high rates combined with several new entrants in the market looking to gain market share had resulted in many financial institutions being able to generate significant reductions in their premium spend.
The company added that three months ago it seemed that this downward trend in the market would continue into 2006 with only the spectre of the insurance market having to make substantial payments for Enron, ‘laddering' and Worldcom-related claims potentially standing in the way.
However the huge insurance payouts as a result of Hurricanes Katrina, Rita and Wilma, which could well be in the region of $80bn, are expected to spell an end to this downward trend in pricing.
