Rates in the United States fell during the January, April, June and July 2010 renewals. The decline in prices varied by region, exposures and loss history but generally moved in a channel of down 6 percent to down 15 percent. Risk-adjusted catastrophe prices in the United States fell by an average of 8 percent through 2010, though the picture was somewhat complicated by adjustments to catastrophe models that decreased predicted losses for earthquake and wind perils. Factoring in modeling adjustments, rates declined by 12 percent on average. Rates in the United States have fallen back to levels last seen in 2008 as improved investment returns and low catastrophe losses in 2009 bolstered (re)insurers’ balance sheets and exerted gradual downward pressure on prices.
Regional Price Fluctuations from 2007 to 2010
Heavy losses sustained so far in 2010 have therefore done little to stem the softening trend in the United States. Apart from a few local exceptions, this is also true on a global level. Although markets that suffered catastrophe losses in early 2010, such as Chile, saw prices increase, the underlying trend elsewhere was for rate reductions. Guy Carpenter data shows Asia and Europe also saw prices fall. Although the downward trend was less marked in Asia and Europe (down 5 percent and down 2.5 percent, respectively), the decline generally saw rates fall back towards 2008 levels in both regions.