Aon has released its first Global Market Property Tracker. The tracker reveals that terrorism and natural disasters have not had a great impact on international property insurance rates, which are continuing to slide.
While the average rate for international property risks saw an increase in average reduction from 14% to 17% over the course of 2005, US non-marine property rates moved from an average mid-year decrease of 10% to an average increase of 37% by the year end in the wake of hurricanes Katrina, Rita and Wilma.
According to Aon, non-marine property premiums are likely to continue their downward trend this year and the bottom of the cycle may not be felt until the end of 2007. But for US-based risks, rates are currently increasing between 20% to 40% for those clients with catastrophe exposures. For clients with no catastrophe exposures rates are generally stable.
Oliver Schofield, director of Aon's global property practice group, said: "A clear divide is opening up between US and international risks and this is likely to be a main feature of the global property market in the coming year."
But he had a warning for investors who entered the market hoping to take advantage of anticipated rate increases following last year's hurricanes.
Schofield said: "With an active hurricane season forecast for 2006 investors hoping to make a quick return on North American business are likely to be unlucky. They will need to build a more diverse global portfolio of business if they want to avoid significant losses when the hurricane season starts."
The Global Property Tracker highlights trends in specific regions:
o Asia – customer loyalty to their insurer partners remains strong.
o Europe – buyers are price sensitive and rates are expected to continue falling during 2006, albeit at different degrees from country to country.
o London market – despite being hit hard by last year's hurricanes, underwriters continue to offer aggressive rates for well risk managed business outside the US.
o Bermuda – underwriters will need to soften their current rating stance towards non-US clients if they want to maintain global diversity in their portfolios of business.
o US – underwriters are increasing rates across the board and limiting catastrophe cover.
