Rates for property “all-risk” policies continue to climb, according to data analyzed from Marsh’s Global Benchmarking Portal for January 2012 renewals.

Catastrophe-exposed accounts—defined as having 25 percent or more of their total insurable value (TIV) in California earthquake or wind Tier-1 zones—increased on average 5.7 percent; the median rate change increase was 3.1 percent. For non-catastrophe (CAT) renewals, average rates increased 5.2 percent. Median rate increases for all types of property placements rose to 3.4 percent for policies renewing in January 2012.

Overall, changes in rates were relatively modest in the fourth quarter of 2011. Just over half of accounts renewed with rate changes between minus 10 percent and plus 10 percent.

While clients with significant losses in 2011 or heavy CAT exposure are more likely to experience considerable rate increases at their upcoming renewals, the January 2012 chart illustrates that insurers are continuing their upward pressure on rates across the board. Clients with little to no CAT (less than 25 percent of TIV in CAT areas) saw similar increases in rates as CAT-exposed accounts at renewal in January, according to Marsh’s analysis. It is expected that this trend will continue through the first quarter as this transitional market continues to shift.

Property “All-Risk” Rate Changes in January 2012

Property Purchasing Trends

Nearly 60 percent of January property renewals experienced rate increases, a trend that began in the second half of 2011. Although insurers are pressuring rates upward, 22 percent of Marsh’s clients were able to secure decreases in rates during the January renewal period. Additionally, one out of every five placements renewed with flat rates. (Note: accounts that have elected to increase deductibles or lower limits have been excluded from the chart below.) While this analysis provides further evidence of the trend of ever-rising share of placements with rate increases, it is clear that there are flat to modest decreases available for some clients.

Percent of Property Accounts by Rate Change

For a more in-depth look at the current insurance marketplace, please read our new report, “Navigating the Risk and Insurance Landscape: U.S. Insurance Market Report 2012” and listen to a replay of our recent WebEx, “Navigating a Shifting Insurance Market Landscape.”

* This analysis is based on available data from the January 2012 renewal period to date. As of this writing, data on Marsh’s clients’ January renewal results is still being submitted and analyzed. Extrapolations and conclusions are based on a statistically significant data pool.

Publisher’s Note: Marsh Insights: Benchmarking Trends is a monthly newsletter covering purchasing behavior and pricing trends for various coverage lines. The real-time data is sourced from Marsh’s Global Benchmarking Portal, which provides industry leading data and analytics through on demand, real time benchmarking analysis, peer comparison reports, and industry/product-specific reports.

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