The effects of SuperStorm Sandy, which struck the Northeast with destructive power in October, were unprecedented in many ways. One way, however, has been as beneficial for corporations as it has been unexpected. Up until now, Sandy has had almost no effect on the rates CFOs and risk managers have been negotiating for property insurance, according to a recent report.
“Despite being the second-costliest storm in U.S. history, Superstorm Sandy … has not been a market-changing event in terms of rates,” according to a first-quarter 2013 report by the U.S. property-insurance practice of Marsh, the insurance broker.
That’s in sharp contrast to prior years, when severe storms caused property-insurance premiums to soar. Right after Hurricanes Katrina and Ike hit in 2005 and 2008, premiums spiked nearly 25 percent and 15 percent, respectively, according to Marsh.
Corporations renewing their insurance policies have indeed met with “relatively stable” pricing, the report says. Average renewal rates in the first quarter were down 3.8 percent for companies without catastrophe risks, nearly flat for companies with moderate catastrophe exposures and up 3.6 percent for corporate buyers with significant exposure to catastrophe risks.
Further, insurers have largely not asked companies to assume higher deductibles or lower maximum coverage limits. Seventy percent of more than 300 Marsh clients in the United States renewing their property all-risk programs (insurance that covers a wide range of conditions, except ones specifically excluded in the policy) in the first quarter of 2013 had either no change in the limits they bought or purchased lower limits.
Eighty-four percent of the Marsh clients renewing in the first quarter also had no change in deductibles.