Business

Despite tsunami, property insurance rates are lowest in years

The devastating earthquake and tsunami in Japan haven't had an effect on commercial property insurance rates, area brokers said.

In fact, rates on commercial buildings are at their lowest levels in years, they said.

That's expected to remain the case, at least for the remainder of 2011.

"It's still pretty flat," said Chock Chapple, chief executive of CIG Insurance. "I'm still seeing rates that I haven't seen in 20 years."

Low rates, that is.

Kurt Watson, chief operating officer of IMA Financial, the holding company of insurance brokerage IMA of Kansas, said he recently read that nationally, commercial property insurance rates dropped 3 percent in the first quarter.

"There's some firming in certain lines of insurance," Watson said. "But for the most part we still see a very soft marketplace.

"I think there will be impact from the earthquake and tsunami in the reinsurance marketplace, but I don't think we're going to see significant changes in the price of our products as a result of the disaster."

Watson and Chapple also don't think the rash of tornadoes last week in the South will affect rates, at least this year.

"For the last three years or so we have gone through a time where there hasn't been a lot of natural disasters," Watson said. "(But) let's say if there was a continuation of the unsettled weather we've had... followed by a very difficult hurricane season, then, maybe pricing would be impacted."

Chapple said rates for several years have been low. Where at one time it was normal for a commercial property owner to pay anywhere from 30 to 50 cents per $100 of a property's insured value, some customers are paying less than 10 cents per $100.

"There are some of the cheapest (rates) in my career," Chapple said.

Watson said the industry has been on an about seven-year run of a soft market, or low rates.

That could be why there is some recent talk in the industry about rates moving higher, Watson said.

But he doesn't think there will be any property insurance rate increases this year.

"We think there may be some firming of prices heading into 2012 and beyond," Watson said, adding, however, that he doesn't expect to see a spike in rates.

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