Q1 property renewals see big gains; nat cat capacity remains challenging
Roughly half of the property market renewals saw double digit pricing increases in the first quarter, with average pricing up at a double-digit pace throughout the period.
Property renewals peaked in February with as much as one quarter of renewals facing price hikes in excess of 20% and average pricing up 13.5% year-on-year, according to the monthly REDY price index prepared by the CRC wholesale and specialty group.
Neighbourhood 15% of policies made it through Q1 renewals with no increase, data indicated.
Inflation and nat cat aversion are to blame. Insurance to value (ITV) "is one of the most significant issues impacting all property insurance areas in 2022," authors said.
Replacement cost inflation, driven by continuing supply chain pressure and the continuing post-pandemic demand surge, are driving premiums above and beyond the increased rate carriers may be seeking, authors noted.
And rates are already suffering nat cat aversion. "Natural catastrophe capacity remains challenging," authors said. "Carrier retrenchments and pullbacks in capacity have increased throughout 2022" with some players abandoning some geographies altogether.
"Extreme hardening is occurring along the Gulf, and particularly in Louisiana, as carriers attempt to remain in the market while maintaining the ability to pay claims," CRC Group authors wrote.
"In certain instances, there may be fewer limits available than in prior years, and the cost of attainable limits may be significantly higher."
The REDY index crafts monthly snapshots on a cut mean of a broad range of 12M renewing accounts from across the US.
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