According to the insurance brokerage at Marsh & McLennan Cos., American businesses are likely to face higher property insurance rates following the significant losses that insurers faced as a result of the decline of investment income and the natural disasters in 2011.
Following a survey performed by Marsh Inc., it determined that over half of the clients in the United States have said that the last half of 2011 included an increase in their cost of property insurance. Among the policyholders who were at the greatest risk of losses from catastrophes, the increases were typically 10 percent or higher.
The New York-based broker has indicated that this trend of increases is also quite likely to continue into 2012.
The insurance company within the Dow Jones Industrial Average, Travelers Cos., as well as the American International Group Inc. are some of the property-casualty insurers that will be boosting their rates following the earthquakes and severe weather that caused 2011 to break records for industry losses. Furthermore, the investment income of the insurer is also shaky as the bond portfolios have declining yields from interest rates that are closing in on historic lows.
U.S. risk practices leader, Dean Klisura, said that “It’s really the catastrophe-exposed risks around the world that are driving” the increases in the rates. He went on to explain that a model change for catastrophe risk and the lower investment returns are also playing a role in this shift.
A Council of Insurance Agents & Brokers survey showed that in the last quarter of 2011, there was an increase of 2.8 percent in U.S. commercial insurance rates.
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