The cost of commercial property insurance rose again during the first quarter, insurance brokerage firms reported recently, particularly for companies that are exposed to catastrophes.
The increases reflect the high price of last year’s catastrophes, as well as recent changes to insurance models. Willis notes that property losses in 2011 totaled $108 billion, the second largest ever after 2005’s $123 billion in losses. And it estimates that a new modeling tool from RMS that’s being implemented by many insurers will increase loss projections for windstorm and storm surge for properties in coastal areas by 40% to 60%.
Those factors are showing up in premiums as companies renew their property insurance. Marsh estimates that the cost of property coverage for companies with catastrophe exposure rose between 10% and 20% in the first quarter, while those without exposure saw rates increase up to 10%. Willis projects increases for companies with catastrophe exposure or poor loss experience from 5% to as high as 15%.
The pressures are less pronounced in other types of coverage. Willis says that more than 75% of companies are seeing “modest rate increases” for casualty insurance, about the same portion are seeing increases for umbrella renewals, and about half are see increases for excess liability.
Marsh says the European debt crisis has boosted companies’ interest in trade credit insurance, particularly in Asia, where demand jumped 60% in the first quarter. And it notes that in China, companies with U.S. exposure continue to see big increases in the cost of directors and officers coverage, with rates up between 20% and 50% in the first quarter.