Insurance Rates Are Probably Going Up
In fact, the events in Thailand, on the heels of the Japanese earthquake and tsunami as well as a significant New Zealand earthquake, has insurance companies thinking about doing business differently. Some have cut back on their business-interruption coverage for natural disasters. And they are expecting commercial buyers to provide them with more information. “Underwriters are now realizing that they may have more exposure than they realized and may not be willing to share it as much,” says Eltham.
Higher rates are possible as well. Last year, half of companies saw rate increases in their property insurance, according to broker Marsh. For companies exposed to large catastrophes and that had significant losses in 2011, rates increased by 10% or more during the fourth quarter.
As I’m listening to the earnings calls this quarter, the one thing that keeps cropping up is that a lot of insurance companies had exposure to Thailand that was more severe than they originally realized. And a lot of companies are struggling with the supply chain disruptions and the knock-on effects that ensued. Everything from hard drives, to auto supplies, and medical devices have now become a lot harder to build and sell.
(source: CFO.com)
