Insurance Rates Climb on Disaster Costs

[xchrom]

http://www.bloomberg.com/news/2011-06-09/disasters-costing-100-billion-begin-to-lift-insurance-rates.html

Natural disasters costing insurers almost $100 billion are beginning to lift some commercial insurance rates after a seven-year decline.

The reversal may benefit underwriters such as Chubb Corp. (CB) and brokers like Aon Corp. (AON)

Insurers hurt in the past 16 months by earthquakes in Japan, New Zealand and Chile and tornadoes in the U.S. are charging more for property coverage. Companies are seeking to strengthen finances after the recession drained value from investment portfolios and limited demand from business clients.

“The market is turning,” said Chris Johnson, senior vice president of commercial insurer FM Global. “If you look at reserves, if you look at every indicator for the industry, we have no slack left,” he said in an interview. “The only way to start turning the corner is for rates to rise.”

[phantom power]

1. was waiting for that shoe to drop

[Donnachaidh]

2. SOP for the industry -- it's got NOTHING to do with *slack*

Ask any southern californian who has had to live through an earthquake and the immediate price elevations after the fact.

I'll bet dollars to donuts you will also see insurance companies threatening to leave areas if any form of restraint is put on the price-gouging. Again, SOP for the insurance industry.

[xchrom]

3. indeed.

fire season is particularly aggravating in cali -- the same homes come under assault all the time.

[Donnachaidh]

4. we would watch firms start to implode if they were told to actually pay claims

Usually, the CEO and upper employees would get these bonuses, line their pockets -- and disappear in the middle of the night. It was one HECK of an education working for the California State Dept. of Insurance. We saw ALL the vicious shenanigans.