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Insurance Rate Hikes Likely at January Renewals

On October 24, Morgan Stanley released research showing that insurers and brokers are generally confident that rates will increase during the renewals scheduled for January 1, 2018, with some industry members predicting increases in the double digits. The speculation about future market conditions follows a series of natural disasters in September and October...
October 31, 2017

On October 24, Morgan Stanley released research showing that insurers and brokers are generally confident that rates will increase during the renewals scheduled for January 1, 2018, with some industry members predicting increases in the double digits. The speculation about future market conditions follows a series of natural disasters in September and October.

In its report, Morgan Stanley described the property/casualty (P/C) industry as bullish after the record catastrophe losses in the third quarter and said that the approximately $100 billion in industry losses from Hurricanes Harvey, Irma and Maria; two earthquakes in Mexico; and the California wildfires have made P/C insurers and reinsurers more outspoken about the necessity of rate increases. Morgan Stanley also said that rate increases could strengthen earnings, and rate hikes will become more important as industry members report their earnings for the third quarter, postings that will reflect losses from the hurricanes and the earthquakes in Mexico.

In a note on October 24, Morgan Stanley estimated that rate increases of between 1 percent to 5 percent could lead to average increases in earnings of between approximately 6 percent and 29 percent. According to the note, the overall increases in the pricing and earnings of companies with larger property cat reinsurance exposures expect to be higher.

 

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