Buyers Advised to Prepare Now for Hardening Markets as 2008 Winds Down
Pressures that could harden the property/casualty insurance market loom in the final weeks of 2008, says a report by the insurance broker Lockton.
“In the first half of 2008 insurer profits declined 57 percent, the industry posted its worst first-half year underwriting performance since 2002, investment returns declined by 18 percent and net written premiums for the industry as a whole were stagnant. Catastrophe losses were double the average of the past decade,” reported Lockton.
Three key markets covered in Lockton’s Fall 2008 Market Update are:
- Executive Risks: Rodger Laurite, Lockton senior vice president in Atlanta, notes that securities lawsuits are on the rise again. “Continued volatility in the financial markets could mean that litigation levels will continue to rise,” he writes. “Even though the D&O (directors and officers liability) market has been soft for most buyers, we recommend that clients use this time to prepare for their upcoming renewals. It is important that clients take steps to differentiate themselves so that they avoid being lumped in unfairly with their peers.”
- Energy: “The energy insurance market, offshore and onshore, continues in a soft phase although there are signs that rating levels are flattening out. Other indicators point towards the first signs of a tightening market in specific areas,” writes Peter Leahy, Lockton managing director in London.
- Property: “The repercussions from the big hurricane losses and the meltdown in the financial markets are just beginning to be felt in the property insurance market. Insurance buyers should prepare themselves for a period of uncertainty and volatility in the property insurance market,” says Jim Rubel, Lockton executive vice president in New York.