September 26th, 2011

Losses Exert Upward Pressure on Property Catastrophe Pricing

Posted at 1:00 AM ET

The high catastrophe losses sustained in the first half of 2011 have already had an impact on capital and pricing in the reinsurance market. Since the January 1, 2011 renewal, the decline in the capital positions of some reinsurers has exerted pricing pressure on catastrophe-exposed markets. Indeed, according to the Guy Carpenter Global Property Catastrophe ROL Index, rates were flat to up 10 percent year-on-year as of July 1, 2011 (see Figure 2). However, rates in non-catastrophe lines continue to experience downward pressure.

Fig 2


Note:  1:   All renewals shown in Figure 2 are at January 1 of the indicated year, except the date labeled June 1, 2011. As the relationship between exposure and rate-on-line differs from January to June renewals, the final data point represents a best estimate of the sequential change in the cost of property catastrophe cover.

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