2012 was an interesting year in the insurance industry, particularly related to real estate driven accounts.  The owners of real estate around the U.S. experienced renewals that are most broadly lumped into a few major classifications:

1.)  Flat pricing with similar terms to expiring (best case)

2.)  Increases in pricing with similar terms to expiring (majority of owners)

3.)  Increases in pricing with modified terms to expiring (worst case)

The renewal pricing increases in 2012 applied mostly to any larger owner who has had difficulty controlling losses or to owners in hurricane prone areas regardless of claims experience.  The increases ranged significantly due to all of the obvious variables that define owners around the U.S. include asset class, geographic territory, and quality of properties owned; however, the notable change in 2012 is that following many years of a soft market there were very few examples of significantly improved pricing with similar or superior terms when comparing 2012 to 2011 insurance placements.

The increases were felt due to a number of reasons:  2011 worldwide reinsurance losses, attritional losses (i.e. fire claims) that consistently plague certain asset classes (multifamily mostly), widespread tornado losses in 2010, significant hail losses in 2011 and 2012, and the creeping issue of intense litigation on liability claims.

Shifting gears slightly to liability insurance, there has been a monumental increase in the liability claim frequency for the average owner.  The economic downturn and defense attorneys  willing to fight for fraudulent claims are largely criticized for the increase in numbers and growing figures for carrier payouts.  Many consider the change in economic position for folks a driving force behind pushing a small slip/fall with greater reverence than ever before.  Additionally, the litigious nature of states like NY, FL, and TX has created a massive scare of insurance carriers to even write business in certain territories.  While many owners discredit insurance carriers for not more aggressively fighting claims and settling for what appears to be baffling sums, the carriers retort that the process of settling claims out of court typically carries  a lower overall cost of claim.  The carriers remind critics that settlements are made with their money and there is no interest in giving up unless it is deemed the least expensive route.  The sum of all the noise is that carriers are less interested in writing real estate than before and the result is the pressure of increased pricing.