Global broker Willis, in its latest “Property Alert,” indicated that the “the global capacity, pricing regimens, terms and conditions for both cat risks and non-cat risks in the global property insurance market are changing more rapidly than many would have anticipated one year ago.”
Willis also noted that “insurance buyers are clearly benefiting from the health, financial strength and increased capacity of today’s insurance marketplace.”
Those conclusions are based on a review of natural catastrophe losses over the past few years combined with projections for the forthcoming hurricane season. The findings show that “outside catastrophe prone areas, the market is soft, with traditional markets and new ones chasing premium down while broadening coverage.” However, the market in catastrophe-prone areas is not soft — “yet — particularly where the total catastrophe risk capacity required by a given insured dampens competitive market forces.”
Willis found that there still are shortages of capacity for coverage against hurricanes, floods and earthquakes. In some areas, it is “impossible to purchase enough insurance to qualify for a commercial mortgage-backed securities loan unless the lenders agree to modify the insurance requirements,” it said.
The report also addressed the need for a long-term solution to insuring against losses incurred from a terrorist attack. “The current iteration of TRIA, the Terrorism Risk Insurance Act, is due to sunset at the end of this year,” the bulletin noted, “and Congressional action is required to ensure that this backstop remains in place.” While Willis said it “firmly believes that the insurance industry has an obligation to cover as much of such a loss as possible. The reality is, however, that the nature and severity of the next attack is restricted only by the imagination of the terrorists — and their thought patterns are beyond the industry’s modeling capabilities.”
For more information or to obtain the full report, visit www.willis.com/Extras/Marketplace percent20Realities.aspx
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