Marsh: Property Insurers Concentrating on Risk Management Marc Jones

With a recession biting and the market hardening, property insurers will have to take a long hard look at risk management practices, according to experts at broker Marsh Ltd.

“The key issue is that expectations are that the property insurance market will begin to firm and prices will go up in 2009,” Nigel Salisbury, U.K. practice leader at Marsh’s real estate practice, told BestWire at a briefing on the state of the market. “The economic environment is also leading to a drive to save money and look at costs.”

According to Jeffrey Alpaugh, managing director of the Marsh global real estate practice, there has been a downturn in real estate due to a lack of deal activity, especially as at present there seems to be a “big gap” between bid prices and asking prices. Due to the credit crunch it is also proving hard for companies to get loans, which is having an affect on their behavior.

Alpaugh said the property insurance market is turning due to global loss activity such as losses from hurricanes Gustav and Ike, storms in France and hailstorm losses, which all combined to make 2008 the second-worst year for property losses since Hurricane Katrina in 2005.

The recession is having another impact on the market, according to Salisbury, who pointed to the increased number of empty business properties due to bankruptcies that will have to be looked after as part of a coherent risk management policy. According to Marsh, during recessions there tends to be an increase in claims activity, with compensation, nuisance claims, and errors and omissions insurance all seeing rises.

(By Marc Jones, London news editor: marc.jones@ambest.com)
Copyright © 2009 A.M. Best Company, Inc. With a recession biting and the market hardening, property insurers will have to take a long hard look at risk management practices, according to experts at broker Marsh Ltd.