Property insurance for real estate firms in 2009 can be described as the hard market that wasn’t. The market for 2009 was in a state of transition; although many real estate clients saw double-digit rate increases due to catastrophe exposures and/or losses, clients that did not fit that profile saw rates remain relatively flat or, in some cases, decrease. At the end of 2009, the casualty insurance marketplace for the real estate industry continued to offer rate reductions on both the primary and excess sides, despite the insurance industry’s increased combined ratios and investment income decreases.

Looking Ahead

As 2010 begins, pricing in the real estate property insurance marketplace is stabilizing. Rate increases have moderated and carriers will need to write business through year-end to make up for anticipated cost increases that did not materialize in 2009. In 2010, continued casualty insurance marketplace rate decreases for the real estate industry could become unsustainable should the insurance industry’s combined ratios remain high and investment income continue to drop. Although real estate companies with more challenging risk profiles will continue to experience more difficult renewals, it is likely that increases in premiums and retentions will begin to moderate in the first half of 2010.