Insurance costs still low but that could change

Risk managers are keeping careful watch on insurance market premiums, wondering how long they can enjoy the soft pricing that has been in place since 2004. Advisen, a New York-based insurance information and advisory firm, puts a number on that question, noting that it's an overabundance of supply that limits property and casualty insurers' ability to raise prices, in the form of $74 billion of excess capacity.

Meanwhile, the sluggish economy is limiting the demand side of the equation, according to Advisen's analysis.

Advisen says that excess capacity could be wiped out by a single "mega-catastrophe" or a number of smaller catastrophes, but argues that the more likely scenario is a slow erosion as the low level of premiums takes its toll on insurers' capital.


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