Insurance rates for natural catastrophe risk and supply chain perils are expected to continue increasing in 2012 across Europe, the Middle East and Africa (Emea), according to insurance broker Marsh.

Substantial catastrophe losses and reduced investment returns prompted many insurers to seek rate increases in 2011, Marsh says in its latest Middle East and Africa insurance market report.

Marsh expects rate reductions for property risks to become less frequent in 2012 as underwriters continue to push for rises or restrict limits on accounts with significant losses or catastrophe exposures. However, companies with favourable claims records, robust data and little catastrophe exposure may be able to secure reductions at renewal in both property and liability classes of business, Marsh reports.

The motor insurance market will also remain challenging in many European countries in 2012 due to insurers continued concerns over high loss ratios. In the Middle East, where competition had led to decreases of up to 30%, motor rates are expected to stabilise.

“Insurers are scrutinising renewals more closely than at any time in the last decade,” says Martin South, chief executive officer of Marsh Europe. “While rates are generally expected to remain stable across Europe for the first half of 2012, the future implementation of solvency II and other market factors may increase pressure from insurers to increase rates.”

Additionally, trends in financial and professional lines of business are inconsistent across Emea; rates have continued to decline for middle market business as underwriters perceive it as a better risk. Larger financial institutions have been unable to achieve further rate reductions, amid insurer concerns about the sector’s exposure to the eurozone crisis and ongoing claims.