Property insurance rates on the rise.
Marsh & McLennan Companies, a global risk and insurance services firm, has begun claiming that property insurance rates all over the world are on the rise. The increase in these rates suggests a solidifying of the global market and could be an implication of an improving economy. Marsh notes that consumers are paying more for their insurance coverage due to the high frequency of natural disasters in the past two years. Another factor that is contributing to higher rates the way insurance companies are changing their exposure to risk.
In the U.S., property insurance rates for homes and businesses in areas that are not prone to natural disasters have grown by an average of 10%. Properties in disaster-prone areas are seeing rates grow by an average of 20% or higher. Prices are rising in other countries as well, though at a quicker pace in nations that have fallen victim to recent catastrophes. Marsh expects to see the rate increase trend continue for the short terms but is not certain what the future will hold for the global property insurance market.
Property insurance rates had been falling sharply over the past several years. This was largely due to the economic disaster of 2008. The effects of the crisis were felt throughout the world and sparked several, more localized economic calamities in nations like Greece and Spain. During this time, insurers had eagerly awaited for the market to turn around so that they could begin reclaiming control over the pricing power they had enjoyed before the disaster took hold.
Marsh suggests that the insured losses from last year’s natural disasters, which are estimated to be at more than $100 billion, are partly responsible for the swing of the market. Property insurers will be able to benefit from the trend, for the time being, but may find some resistance against rising insurance rates from regulators. Many consumers have already expressed disdain for having to pay more for their coverage, and their concerns have been taken to heart by regulators all over the world.