NAPCO Report: Low Property Catastrophe Losses and New Capital Drive Down Pricing and Increase Competition Among Insurers

State of the Market Insights Report asks whether the continued increase in industry capital from non-traditional sources will force insurers to rethink products and pricing

Iselin, N.J. — April 8, 2014 — With low global insured catastrophe losses and added capacity from non-traditional market sources, insurers have become increasingly competitive and are reducing rates for most accounts. This is a key takeaway from State of the Market: NAPCO Property Catastrophe Insights report from NAPCO, a wholesale insurance broker with expertise in the property catastrophe market.

Drawing on broker and insurer insights, as well as industry wide statistics, this report analyzes property-catastrophe insurance industry performance in 2013, catastrophe losses and trends for 2014.

“While catastrophe model guidance and rating agency pressure continue to play an important role in pricing and evaluating risks, the continued increase in the industry’s capital – including new capital from non-traditional sources – is changing how pricing is done,” says David Pagoumian, CEO of NAPCO. “These developments may begin to disrupt old business models and force insurers to rethink products and pricing.”

According to Pagoumian, brokers who understand the marketplace have an opportunity to help clients figure out when to remarket programs and how to structure programs to provide better coverage and pricing.

Key report findings include:

  • At about $31 billion, 2013 global catastrophe losses were well below the 10-year average, with no one event proving capable of affecting pricing.
  • Insurers’ net income rose 55 percent to $43 billion, thanks to strong growth in premiums and low catastrophe losses.
  • New capital from non-traditional sources now totals $50 billion, and catastrophe bonds are being used to protect against a wider array of risks.
  • Low catastrophe losses plus competition from alternative markets are driving down the price of reinsurance, 10 to 25 percent on loss-free accounts.
  • The frame habitational and commercial flood insurance markets remain difficult.
  • After raising rates in 2012 following a CAT model release, insurers kept rates relatively stable throughout most of 2013; in 2014 expect a soft market where insurers offer lower prices and plenty of capacity.

Download the full Fall 2013 State of the Market report at for a deeper analysis of these trends detailed placement considerations for brokers.

NAPCO ( is a leading wholesale broker of commercial property insurance coverage, providing retail agents and brokers with an efficient, single-source independent marketing arm for difficult placements that have significant exposure. The company utilizes in-depth research and sophisticated risk modeling to implement coverage and cost-effective programs. Headquartered in Iselin, N.J., NAPCO provides access to the global insurance market, including major and specialty domestic carriers, excess and surplus lines markets, reinsurers and international providers.


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