Insurance Rate Increases Being Stifled, Claims Marsh

Excess capacity and competition have been stifling insurance rate increases across Europe, the Middle East and Africa in the first half of 2009, according to new figures from broker Marsh.

According to the company, although rising claim notifications are increasing the upward pressure on rates, at the same time the competition between carriers, along with "plentiful" capacity, has applied counter-pressure.

Figures supplied by Marsh showed that property rate changes in the first half of 2009 were between 0% and -10% in France, Germany, Greece, Poland, Italy, Russia and Saudi Arabia. Rates changes were static in the Netherlands, Norway, Finland, Austria and Belgium. The only countries to show increases were Israel, Nigeria, South Africa and the United Kingdom (large corporates), of 0% to 10%.

For casualty rates the figures are just as grim. Only three countries -- Israel, Slovenia and the United Kingdom (large corporates) -- saw increases of 0% to 10%. The others were either static (0%) or saw changes of 0% to -10%. Spain saw rate changes of -20% to -30%.

"As clients look to manage their way through the economic downturn, they are reducing the sums they insure in an effort to cut costs where possible, potentially leaving them underinsured," said Bruce Trigg, leader of Marsh?s risk management practice in Europe, the Middle East and Africa, in a statement on the figures. "This has resulted in premium reduction and increased capacity in the market."

He said this means the overall insurance marketplace remains competitive, "especially in countries that have a developed insurance market. Capacity is largely unchanged and insurers' appetite for risk remains. However, as claims rise, insurers are beginning to negotiate more aggressively on renewals, as previous rate reductions were unsustainable."