Natural disasters could cause increase in commercial insurance rates
Natural disasters costing insurers almost $100 billion are beginning to lift some commercial insurance rates after a seven-year decline, Bloomberg reported.
Insurers hurt in the past 16 months by earthquakes overseas and tornadoes in the United States are charging more for property coverage. Companies are seeking to strengthen finances after the recession drained value from investment portfolios and limited demand from business clients.
“The market is turning,” said Chris Johnson, senior vice president of commercial insurer FM Global. “If you look at reserves, if you look at every indicator for the industry, we have no slack left. The only way to start turning the corner is for rates to rise.”
Among the signs of sporadic rate increases: Prices for property coverage for businesses rose 0.2 percent in catastrophe-prone areas since mid-April, according to a report from Marsh & McLennan Cos. Inc. last week. The cost for general liability policies fell at a slower rate so far this quarter than a year earlier.
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