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.
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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%.
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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.
