The market reacts to recent natural catastrophies
The reinsurance industry is reeling from huge rate increases since the earthquake, tsunami and nuclear disaster that struck Japan in March of this year.
Rates for earthquake coverage in Japan have reportedly risen by up to 60%.
The business newspaper City AM quoted Matthias Weber, head of property and speciality reinsurance at Swiss Re. “Typical rate increases we have seen on 1 April are between 20 and 50, or 20 and 60 percent,” he said.
Swiss Re was liable for $2.3 bn in pre-tax catastrophe losses in the first quarter of this year. The events in Japan caused over half of these losses.
As reported on the Bloomberg website Chris Johnson, senior vice president of FM Global stated: “The only way to start turning the corner is for rates to rise.”
The catastrophes in Japan are the worst of a series of natural disasters that are expected to cause a significant change in the insurance market.
Floods in Australia, earthquakes in Japan, Chile and New Zealand and storms in the US will cause a rise in insurance rates after “a seven year decline.”
