Insurer capacity slows property rates, relief seeps to cat-hit accounts

The capacity crisis in property is all but gone, bringing some relief from rate hardening in H1 that could even  extend to loss hit cat accounts in H2, analysts at the insurance brokerage USI have suggested. 

“The capacity challenges seen in 2023 have vastly improved, with more programs seeing competition on single insurer and shared/layered business, resulting in favourable renewal outcomes for insureds,” analysts wrote in their mid-year market update. 

Elevated rates and the ensuant improvement in margins have drawn in added capacity, chiefly directed at higher quality risks. 

“Competitive capacity from London and Bermuda has replaced large portions of domestic insurer capacity, in some cases accounting for 50% or more of programs,” authors wrote. 

The lingering caveat: “some pockets of disruption still exist and challenging risk profiles remain difficult to place.”

But for a broadening portion of the market, capacity has meant relief from the wild rate ride of 2023. 

“Large rate increases from 2023 have mostly subsided for the broader market,” USI analysts wrote, citing flat rates to 10% gains for both natural catastrophe (CAT) and non-CAT property where loss history and risk quality don't deter. 

Relief from the hardening may even be shifting into loss hit accounts. 

The annual rate growth in cat property with a loss history or quality issues should ease in H2 to a range of 10 to 20% from 15 to 30% growth in H1, USI forecasts now indicated.  

In quality cat and non-cat property, the outlook for H2 matches that of H1: rates will be flat or up to a max of 10%, analysts wrote. 

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