Rates moderate further in Europe and fall in UK

Insurance price increases have continued to moderate in Europe, with rates increasing by just 1% in the second quarter of 2024, following a 3% increase the Q1, according to Marsh’s Global Insurance Market Index. For the UK, insurance rates declined 3% in the second quarter of 2024, following a 2% fall in the first.

European property and casualty saw rates increase in the second quarter but at a slower pace, while financial and professional lines rates fell as capacity increased.

European property insurance rates increased 2% in Q2, continuing a long moderation in the pace of increases. Marsh said natural catastrophe exposed organisations continued to experience the greatest challenges, but the pace of increases has slowed, and some insureds saw reductions. In many cases, long-term agreements (LTAs) were offered.

“Capacity and price challenges continued for heavy occupancy or distressed businesses, such as those with losses and/or those perceived by insurers as having substandard risk management,” said Marsh.

European casualty insurance rates increased 4%, compared to 5% the previous quarter. In general, casualty rates were stable across Europe, said Marsh, with exceptions seen in loss-affected and US-exposed risks. It added that exclusionary language for per- and polyfluoroalkyl substances was typically negotiable with insurers.

Financial and professional lines saw rates fall 3%, with LTAs available in many cases, some with reductions built in for the second year. Capacity increased as new insurers entered the market and incumbents deployed more capital, and Marsh said some clients were able to negotiate wording and other innovations, particularly related to D&O and environmental, social and governance (ESG) exposures.

Cyber insurance rates also continued to decrease, falling 7% in Q2, though Marsh explained that pricing depended largely on industry, perceived risk quality, and company size. Insureds with revenues above €250m and effective cybersecurity controls typically experienced greater rate decreases.

“The downward movement in rates was observed mainly in excess layers; larger accounts also generally experienced savings at the primary and first excess layers. Coverage restrictions were eliminated on accounts due to perceived improvements in underlying risk quality and increased flexibility on the insurer’s side,” said Marsh.

Property insurance rates decreased 2% in the UK, compared to a 2% rise the previous quarter. Casualty insurance rates were flat, with general liability and employers liability rates declining, as capacity increased.

However, underwriters maintained focus on US exposures, due in significant part to large jury verdicts, and auto liability rates increased, driven in part by the rising costs of vehicle repair, said Marsh.

UK financial and professional lines rates declined 7%, the eighth consecutive quarter of falling or stable rates, said Marsh. D&O liability rates fell between 5% and 10%, on average, while financial institutions rates fell by 7%. Commercial crime rates declined 5% as capacity remained readily available. Insurer competition continued to increase for cyber, which saw rates decrease by 7%.