US property rates trending above 2023 forecast in capacity clinch: USI

The US property insurance market is trending towards higher rates than forecast in early 2023 as capacity has been tight and looks ever tighter, insurance broker group USI Insurance Services has said.

“The shortage of available capacity, especially on locations with exposure to natural catastrophe perils, will continue to drive pricing upward,” authors wrote in a mid-year update to 2023 market forecasts.

High-quality cat-exposed property with minimal loss experience are now facing rate increases this year of 25 to 150%, the largest upward revision in the property segment.

That puts the sub-segment on a par for rate growth with cat-exposed property sporting poor risk quality and a heftier loss history. Today, as in the prior forecast, that group is facing rate gains in 2023 of 25 to 150%.

Rates for high-quality non-cat property with minimal loss experience is now seen up 5 to 15% this year, versus a prior forecast range of 5 to 10%.

First half rate gains for Florida, Texas and Louisiana wind-exposed properties, wildfire exposed accounts and locations with poor risk quality exceeded initial forecast and pushed up the outlook, analysts wrote.

High-risk coastal windstorm clients may end up facing a market tapped out on available capacity, USI warned.

“Coastal properties in Florida, Louisiana and Texas with renewal dates in the second half of the year will see increased pressure on rates, capacity and terms,” authors wrote.

“As insurers deplete their allotted wind aggregates with little to no additional capacity available, these renewals will have difficulty finding the required capacity to fill out their programmes or desired limits.”

Rising reinsurance costs are having a disproportionate direct effect on larger properties where primaries need to share risk up front with their reinsurance backers.

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