Magazine article Mortgage Banking

Hurricane-Related Insurance Rate Hikes Expected

Magazine article Mortgage Banking

Hurricane-Related Insurance Rate Hikes Expected

Article excerpt

COMMERCIAL INSURANCE PREMIUMS TOOK A sharp downward turn in the third quarter of 2005, but the impact of Hurricanes Katrina and Rita has already begun to be felt, according to the Risk and Insurance Management Society Inc. (RIMS), New York.

The results of the RIMS Benchmark Survey, which was produced for RIMS by New York-based Advisen Ltd., showed third-quarter renewal premiums were down 5 percent on average compared with the same quarter in the previous year. Directors' and officers' liability experienced the steepest decline, falling 8.45 percent, while property premiums fell by just less than 6 percent and general liability was down 5.2 percent, said RIMS.

However, the bulk of renewals reported in the survey had secured pricing before the impact of Hurricanes Katrina and Rita hit the market. Since then, property insurance programs have experienced steep rate hikes, noted the survey.

The survey pointed to carrier financial performance as a catalyst for dropping prices.

The property and casualty industry experienced record profits in the first half of 2005, leading underwriters to drive down renewal rates in a competitive scramble for increased revenue. But the continued soft market has yet to feel the impact of the devastating hurricanes that hit the Gulf Region in August and September, according to Karen Beier, a member of the RIMS board of directors, membership and chapter services portfolio.

"There is increased competition as carriers all vie for renewals in this profitable market. …

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