U.S. commercial property rates down 10% in 2003: Aon

Despite growing uncertainty around terrorism risk, the U.S. commercial property segment saw rates drop by about 10% last year, says Aon Corp. Insurers benefited from an absence of catastrophe losses last year, as well as returned strength in investment returns. Buyers also saw an increase in capacity in the property market.The results were part of an annual survey of commercial property insurance buyers, which found increasing concern over terrorism risk and the potential withdrawal of the government Terrorism Risk Insurance Act (TRIA) program. “Buyers of property insurance do tend be the first to reap the benefits of the insurance market cycle and this recent downturn has enabled buyers to reduce costs without having to significantly increase retentions,” notes Gary Marchitello, managing director of Aon’s U.S. national property practice group. “The anticipated withdrawal of the U.S. government’s TRIA provision has however raised a great deal of uncertainty amongst buyers who are showing increasing concern about the potential impact of terrorism on their business.”Buyers further report a changed market, with the rising use of captives and self-insurance and the predominance of the U.S. and Bermuda markets in providing commercial property coverage.