North American commercial property insurance rates could see a 25% spike next year for properties that suffered catastrophe losses this year, according to a report by Willis Towers Watson.
The commercial property insurance market has been soft for the last several years, Willis Towers Watson said. But the market – largely due to the back-to-back catastrophes of hurricanes Harvey, Irma and Maria – is now heading for a correction.
Willis Towers Watson estimated that rates for commercial properties that are located in catastrophe-prone areas, but were not damaged by the storms, could see an increase between 10% and 20% according to a
Reuters report. Coverage costs for properties in other locations could rise by 5%.
Insurers worldwide are pondering rate hikes after weathering what could turn out to be their most costly quarter on record, Reuters reported. American International Group (
AIG) said Friday that it would pursue double-digit rate increases. The company saw $3 billion in catastrophe losses in the third quarter, according to
Reuters.
“The marketplace is going to react, and buyers need to be ready,” Willis Towers Watson said in its report.
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