The record catastrophe losses of 2005 did not produce the overall hard market at renewal season predicted by some analysts, a number of leading brokers said.
According to statements they have issued, while major price hikes were achieved for property catastrophe covers, particularly for those carriers with big Gulf exposures, pricing in other lines has remained flat.
Sean Mooney, chief economist for Guy Carpenter Inc., New York, said last year's catastrophes were an earnings, and not a capital event.
“It is unlikely that we will see a hard market across all primary lines of business, which one would normally expect following losses of this magnitude,” he said.
Primary insurers were reluctant to accept rate increases across the board for fear of not being able to pass them on to insureds, he said.
Charles Cantlay, deputy chairman for the U.K. reinsurance unit of Aon Corp., agreed.
Very large price rises have been confined to reinsurance cover for U.S. commercial and residential property against hurricanes, protection for oil rigs and refineries, and risk cover bought by reinsurers from other reinsurers, which have all been severely hit by claims from the storms, Cantlay said.
Grahame Millwater, chief executive officer of London-based Willis Re, said the insurers have had several good years under their belts and thus appear reluctant to risk losing market share by striving to increase prices.
Nonetheless the losses will impact the industry in other ways. “Rating agencies, risk modelers and reinsurance companies are going to require more transparency, analysis exposure control and structural clarity,” he said.
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