Global insurance rates fall for 16th quarter, but pace of decline slows

Global insurance rates have now fallen every quarter for the past four years, but the rate of decline slowed for the fifth consecutive quarter, finds Marsh’s Global Insurance Market Index. In continental Europe, however, rates fell slightly more in the first quarter of 2017 than Q4 of last year, and in the UK the rate of decline was static. The decline in global rate reduction was effectively caused by the US and Asia-Pacific markets. Marsh also finds that prices fell across all major lines, but that rate decreases moderate globally across property, casualty and financial and professional lines in the first quarter. But the headline figure form Marsh’s figures, derived from 90% of the broker’s premium, reveals that global rates fell for the 16th consecutive quarter as the soft market continues. They decreased by 2.3% in Q1 2017, which compares to the previous quarter’s fall of 3.1% This is now the fifth consecutive quarter that global rates decreases have moderated, having peaked at a 5% reduction in Q4 2015. In continental Europe and the UK, the story is even rosier for insurance buyers. In continental Europe rates were down by 4.3% in Q1, compared with a fall of 4.2% in the last quarter of 2016. In the UK, rates fell equally in the last two quarters at 4.8%. In fact, the UK has recorded rate reductions of around 5% for the last year and a half and has bucked the global market trend for moderated decreases. You must look to the US, where rates fell by 1.5% in the last quarter compared to 3% in Q4 2016, and Asia-Pacific, where composite rates fell by just 0.4% compared with 2.5% in the previous quarter, to see why the global rate reduction has slowed. In Latin America rates fell by 2.3%, better news for buyers than the 0.5% reduction recorded in the previous quarter. According to Marsh figures, global property rates declined on average by 3.6% in the first quarter compared to a decrease of 4.2% in the fourth quarter of 2016. It was also the third consecutive quarter in which global casualty rate decreases moderated, down 0.6% compared to 1.9% reductions in Q4 2016. This was largely driven by the first increase in US casualty renewal rates since the third quarter of 2014, states Marsh. Financial and professional lines declined by 2.6%, compared to 3.0% in the previous quarter. In continental Europe property rates were down by 5.3% on average in Q1, similar to reductions seen each quarter during the past year. Casualty rates fell by 4.0%, a higher decrease than the 3.2% seen in Q4 2016 and significantly better news for European buyers than the flat renewals rate in most of 2016. Financial and professional lines were down 2.1% in continental Europe during the last quarter, a slight reduction on the 2.9% fall seen at the end of last year. In the UK, property reductions were high, but flat at 5%. Casualty rates fell evenly compared to preceding quarters at 4.2%, while UK financial and professional lines were also down 5%. Commenting on the findings, Dean Klisura, global industry specialties and placement leader at Marsh, said: “The first quarter of 2017 was the 16th consecutive quarter in which average renewal rates declined. This trend continues to be driven by a marketplace with significant capacity and a competitive underwriting environment.”

Global insurance rates fall for 16th quarter, but pace of decline slows

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