Construction, property and casualty insurance buyers see premiums fall up to 30%
Overcapacity in the international construction, property and casualty markets in the first half of 2014 has resulted in rate reductions of up to 30% for commercial insurance buyers, according to Willis.
The broker’s Q3 2014 Construction, Property & Casualty Market Review identifies benign loss activity and softening conditions in the global reinsurance market as catalysts, which are having a trickledown effect to the primary insurance market.
Furthermore, corporate insurance buyers are also benefitting from an increase in available natural catastrophe capacity.
With no withdrawals of capacity from the construction market in the past six months, capacity is at an all-time high, according to the report. Meanwhile, the volume of construction projects in many parts of the world has reduced, intensifying competition between carriers for premium volume and market share in the construction insurance market.
In the meantime, the international property and casualty insurance market continues to witness an influx of capital. Provided that detailed risk information is available, carriers are prepared to offer insurance buyers improved coverage, particularly improved contingent business interruption extensions, the report said.
In the general property market, premium rates are continuing to decrease by between 10% and 15% on claims-free business. Even larger reductions are available for buyers that can demonstrate robust risk management practices and detailed risk information.
Willis head of broking and industry practice groups for construction, property and casualty, James Nicholson said: “Our view is that soft market conditions are likely to continue without necessarily threatening the profitability and solvency of carriers, provided that they actively manage their portfolios.
“For their part, corporate insurance buyers can achieve substantially better than average pricing through the provision of good underwriting data, the use of analytics to drive pricing and through strong relationships with carriers. The outlook therefore remains favourable for corporate buyers and, more particularly, for the well informed.”
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