The surplus of capital among insurers and reinsurers continued to fueloverall softening in the U.S. property insurance market through the third quarter of 2013, Marsh said in a new report. For the first nine months of 2013, U.S. property rates are down on average 1.1 percent for firms with total insured values (TIV) of more than $5 billion and roughly flat—down 0.1 percent—for firms with TIVs of between $1 billion and $5 billion.
According to Marsh’s 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 percent more for their property coverage in 2013, down from the first-quarter average increase of 3.5 percent.
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 U.S. Property Practice Leader, in a statement. “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.
“New capacity and competition will continue to create favorable strategic and tactical property insurance buying opportunities in 2014,” Ellis said.