Marsh says property insurers continue to shy away from catastrophe-exposed risks as they chase profits over growth.
Some have quit certain industries, leaving would-be clients with no choice but to seek cover from the London market at significantly higher premiums, the broker’s latest property insurance market update says.
Many insurers have left the recycling industry following several years of major fire losses.
“The London market is accepting new recycling business, but at a significant premium; in many cases pricing is being quoted at multiples of historical rates,” Marsh says.
Some insurers have exited the food and beverage industry, which uses the heavily scrutinised material expanded polystyrene (EPS), causing market capacity to plummet.
“Consequently, local competition has disappeared and capacity is now sought in Asia, London and Middle Eastern markets just to complete placements with medium to high policy limits,” Marsh says.
“Overall, the major shift in the insurance market’s dynamics is insurers’ renewed focus on underwriting for profit rather than for growth.”
EPS fire claims over the past 15 years have cost $2 billion, the report says.