For the second quarter running, broker Marsh has said that secondary catastrophe perils have remained a focus, with commercial properties exposed to those risks seeing some steep rate increases.
These and the loss affected regions of the United States are where the most significant commercial property insurance rate increases were seen in the third-quarter of 2021, according to Marsh’s latest data.
Which is likely partly due to escalating reinsurance costs for insurance carriers writing that kind of business, or in those areas where catastrophe losses and secondary perils have remained a source of loss and in focus.
“Clients that had experienced significant losses, were considered to have relatively poor risk quality, or had significant exposure to secondary catastrophe (CAT) perils experienced above average rate increases. Clients with
no losses, good risk quality, and were in a sought-after industry class had a better experience,” Marsh explained.
Adding that, “More than ever, insurers focused on secondary CAT perils — including wildfire, convective storm, and flood.”
Wildfire risk is a particular area of concern, again an area that is tracking reinsurance costs as well.
Marsh said that, “The market deteriorated for clients predominantly exposed to wildfire, a trend that is expected to continue.”
Overall, commercial property insurance rates in the United States rose by 10% in Q3 2021, up from 9% in Q2.
Another point of note from Marsh’s latest report on global commercial insurance rates, is that the broker is warning that European commercial property rates may become destabilised after recent catastrophe losses.
“The significant losses experienced during 2021, such as the European floods, are likely to destabilize the market in the near term, particularly in affected areas,” Marsh explained.
Both the Asia and Pacific regions are also facing some challenges in catastrophe zones, as well as for those clients that have been loss impacted.