US commercial property owners should see their insurance premiums drop in 2014, according to a report released by Willis Group Holdings P.L.C.
The 2014 Market Readiness Report points to a number of factors, including new competition and falling reinsurance prices, as reasons for better pricing next year.
Willis says that it expects rates to drop an average of 10-12 per cent for non-catastrophe-exposed risks. Properties in areas at risk will probably see rates drop by 5-10 per cent.
The report stated that most shared and layered accounts were oversubscribed in 2013 “due to the oversupply of capacity in the market.”
This trend is expected to continue in 2014 due to broker facilities, capital commitments from a leading U.S. carrier, and capital markets penetrating the traditional property market more than in previous years. The trend is expected to put downward pressure on rates.
The report notes that these factors affect property lines only, and that rates for other types of business insurance, including casualty, workers compensation and employee benefits coverage are expected to be flat or actually increase.
It predicts that the cost of workers compensation coverage will increase between 2.5-10 per cent, with policies in California increasing up to 20 per cent.
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