Natural disaster insurance premiums set to rise 5-15%

Reinsurers said that there was a much larger number of large claims worldwide this past year costing the industry a huge amount of money.

Natural disasters that occurred around the world this past year are expected to result in a 5-15% rise in insurance premiums for all types of properties: homes, businesses, industry, mortgages, and civil engineering, with an emphasis on coverage for damage caused by natural disasters (in Israel, mostly earthquakes). Israeli insurance company executives have just returned from an insurance conference in Baden-Baden, Germany, which opens the rounds of annual work meetings between insurance companies and reinsurers, during which the 2012 working plan will be set. However, the full terms between local insurance companies and global reinsurers - which will greatly influence 2012 insurance rates - have not yet been signed, and as a result there are no specific details available.

According to senior Israeli insurance executives who participated in the conference in Baden-Baden, the main focus this year was the problem of natural catastrophes worldwide. Reinsurers said that a much larger number of large claims were made throughout the world (more than a billion dollars worth) this past year that cost the industry a huge amount of money.

The most notable natural catastrophes that occurred this past year were the tsunami in Japan, earthquakes in New Zealand (a combination of extreme economic damage in a state where insurance premiums were not priced correctly, in a small insurance industry that is not expected to pay out the expenditures), flooding in Australia, the earthquake in Chile, hurricanes in the US, flooding in Europe, and most recently flooding in Thailand.

Reinsurers at the conference said that there was a surprising amount of large-scale damage this year in regions that are not designated as "hot spots" for catastrophes, but that are considered calm areas. Since Israel is considered a calm area, damages that occurred here will significantly affect local insurance rates.

Published by Globes, Israel business news - www.globes-online.com - on November 7, 2011

© Copyright of Globes Publisher Itonut (1983) Ltd. 2011

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