Mid-year US property: rate growth 'stable,' but coverage strained

The US property insurance market at mid-year may have held rate growth to the pace seen late 2021, but is stiff-arming key properties to avoid cat exposure and "skyrocketing" replacement costs.

"Insurance carriers are carefully deploying capacity with an eye on catastrophic events, the supply chain crisis and its effect on material costs, and the skyrocketing cost of repairs due to the impact of inflation," a mid-year market update from the  USI insurance brokerage claimed.

Rates in property continue to trend up at roughly the pace noted at end-2021. Mark up to 10% gains at the mid-year mark for non-cat policies with a soothing loss history.

Elsewhere, things get pricey, with 10 to 15% gains for low-loss cat property and over 20% for the risky business.  For those properties, policies go from pricey to non-existent quite quickly.

To wit: appetite and capacity has changed "dramatically" for Gulf Coat property exposure in early 2022, authors called out. Varied cases of cut-backs, full departures or capacity encroachments abound.

Other carriers are shifting into "inferior coverage with increased deductibles, unfavourable warranties and/or conditions, expanded exclusions" while still demanding the 15% to 25% hike in rates that seems to mark the upper end of the renewal increases. Roofs are a point of contention and even cause for sudden cancellation.

Those policies are now taking on windstorm deductibles in excess of 5% of value, water damage deductibles or outright exclusions, actual cash value on older roofs, and reduced or removed coverage on outdoor property.

When it isn't the rate, it’s the insured value and  USI cites cases of carriers pushing for increases up to 20%, bearing a "drastic" impact on insuranc3 bills.  USI warns clients that if cost issues abate, it will still be "very difficult to convince carriers that values should trend downward in the future."

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