The rate increases witnessed in US commercial property lines since the record catastrophes of 2017 took place are beginning to wane, according to Willis Towers Watson.
In its latest Marketplace Realities report, the intermediary said the sharp rate increases achieved by carriers at 1.1 were unlikely to be sustained at forthcoming renewals.
“Commercial property insurance rate increases are easing off initial spikes following 2017’s record natural cat losses,” Joe Peiser, head of broking for North America said.
However, despite rate increases slowing, Peiser warned insurance buyers still face upward pricing pressure on many lines of business.
“Most buyers can expect their insurance spending to rise in 2018, though the dramatic predictions of eye-popping increases that came in the wake of the record-setting 2017 catastrophes are now behind us,” he said.
The broker has predicted that cat-exposed books that suffered losses will face the biggest hike – forecasting rate increases of between 15 and 20 percent at forthcoming renewals.
For property cat exposed books that escaped the worst of the losses, Willis predicts rises of between 5 and 15 percent, with non-cat exposed books looking at a possible swing to reductions of 5 percent or even an increase of 5 percent on current rates.
Willis reiterated its warning to buyers that it made in February that they may be required to change carriers in order to avoid rate increases.
“For buyers approaching renewals, aggressive marketing may be rewarded, although that could involve displacing an incumbent insurer,” the report said.
Willis said that the casualty market had not seen the “knock-on effect” from the property cat losses that were anticipated in the wake of the third quarter catastrophes, with the broker forecasting rates for the line of business to be flat or up 4 percent.
“To date we have not seen a widespread increase in casualty rates, at least not of the magnitude that insurers’ rhetoric implied,” the report said.