US property insurance rates continue to soften through Q3 2013: Marsh

Property rates down an average of 1.1% for firms with total insured values greater than $5B

The surplus of capital among insurers and reinsurers continued to fuel overall softening in the US property insurance market through the third quarter of 2013, Marsh said in a new report. For the first nine months of 2013, US property rates are down on average 1.1% for firms with total insured values (TIV) of more than $5 billion and down 0.1% for firms with TIVs of between $1 billion and $5 billion.

According to the most recent Marsh Risk Management Research briefing, “Benchmarking Trends: Capital Surplus Affecting Property Insurance Pricing”, firms with TIVs of less than $1 billion paid on average 2.3% more for their property coverage in 2013, down from the first-quarter average increase of 3.5%.

Read: US commercial insurance prices continue to rise but pace is softening

“The current supply of capital dedicated to the global property insurance market continues to temper rate increases, even on those accounts with losses,” said Duncan Ellis, Marsh’s US Property Practice Leader, in a press release. “It’s a different property market than it was a year ago when Superstorm Sandy made landfall in the Northeast causing underwriters to tighten terms and conditions, restrict capacity, and raise prices.”

While Superstorm Sandy heavily influenced the property market in the Northeast in the first half of 2013, the effects diminished as the year progressed, the report notes. Sandy, however, has been a major impetus behind greater scrutiny of flood exposure and the remapping of many flood zones by the Federal Emergency Management Agency, Marsh notes in the report.

Read: Insurance rates continue to rise for US construction firms

“New capacity and competition will continue to create favourable strategic and tactical property insurance buying opportunities in 2014,” Ellis said.

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