Benchmarking Trends: Capital Surplus Affecting Property Insurance Pricing

US property insurance rates stable or declining through third quarter 2013.

New capacity and competition have influenced pricing and capacity for given risks, but have not yet affected underwriting. For example, there has not been a broadening of terms and conditions, and deductibles were being held at levels appropriate for the exposure.

The surplus of capital among insurers and reinsurers continued to fuel overall softening in the property insurance market through the third quarter of 2013. Average property insurance rates for large companies have to date declined in 2013, despite showing a slight increase in the third quarter.

Although most insureds experienced rate decreases driven by competition, even those that purchased limits far above the average felt the knock-on effects of oversupply in the market and likely obtained a more favorable result.

This year’s natural catastrophes have not caused sufficient losses to impact the current supply of capital dedicated to global property insurance.