Double-digit increases for global commercial insurance prices in Q4 2021

Global commercial insurance prices increased 13% in the fourth quarter of 2021, although the rate of increase continues to moderate in many lines of business and in most geographies, according to Marsh’s Global Insurance Market Index. Marsh said pricing increases across most regions moderated due to a slower rate of increase in property insurance and D&O liability. The biggest increases were seen in the UK (22%), the US (14%) and the Pacific region (13%). Continental Europe saw 9% increases and Asia just 4%. In all regions, the market remained challenging for risks with poor loss histories or major catastrophe exposure, while loss-free risks were able to access capacity and saw smaller rate increases. Terms and conditions continued to tighten in many classes globally. Global property insurance pricing was up 8% on average in the fourth quarter, down from a 9% increase in the third quarter of 2021, while casualty pricing was up 5% on average, down from 6% in the previous two quarters. Pricing in financial and professional lines, driven by cyber, again had the highest rate of increase across the major insurance product categories, at 31%, compared to 32% in the previous quarter, said Marsh. The frequency and severity of ransomware claims continued to drive cyber insurance rate increases, with many insurers seeking to tighten coverage terms and conditions, said Marsh, adding that prices increased 130% in the US and 92% in the UK. Lucy Clarke, president, Marsh Specialty and Marsh Global Placement, said: “We are operating in a challenging risk and insurance market, and will continue to focus on developing solutions in classes such as cyber, which will continue to be difficult for both clients and insurers. More broadly, however, we expect continued moderation in rate increases through 2022, a trend which will be welcomed by our clients.” US pricing Property insurance pricing rose 7% in the fourth quarter, compared to 10% in the previous quarter. Marsh said clients with poor risk quality, meaningful losses or significant exposure to secondary catastrophe perils – including wildfire, convective storm and pluvial flood – generally experienced above-average rate increases. Clients with no losses, good risk quality and in sought-after industries were able to access surplus capacity. Casualty insurance pricing in the US increased 4%, down from 7% in the third quarter. Excluding workers compensation, the increase was 7%. Marsh noted that general liability pricing continued to be affected by jury verdicts and social inflation. One area that saw pricing increase over the previous quarter was financial and professional lines pricing (34% compared to 27% in the third quarter). D&O liability insurance pricing for publicly traded companies increased 6%, lower than the 10% in the prior quarter. Marsh said this was impacted by new capacity, which increased competition in the mid-to-high excess layers, and many clients increased their D&O limits. Continental Europe and UK pricing Property insurance pricing in continental Europe rose 10%. Marsh said competition for new business increased among European domestic carriers, while insurers continued strict underwriting controls, particularly for large, complex multinational clients. Casualty insurance pricing increased 7%, up from 5% in the prior quarter. Loss-impacted renewals were the most challenging, with insurers looking to restrict capacity. Financial and professional lines pricing increased 13%, down from 14% in the third quarter. Marsh said the D&O market continued to be stable, due to increases in insurer competition, appetite and capacity. But in general, underwriters required more information at renewal, while self-retentions increased, as did the use of captives. Property insurance pricing in the UK increased 10%, driven by loss activity during 2021, as well as rising reinsurance treaty costs. Casualty insurance pricing in the UK increased 4%. The rate of increase for D&O was 24% in the fourth quarter, compared to 61% in the third quarter, due primarily to increased capacity. Latin America and Caribbean pricing Property insurance pricing increased 7%, up from 2% in the previous quarter. Brazil and Colombia saw no change in the rate of pricing increase, while the rest of the region increased (5%-10%). Casualty insurance pricing declined 3%, largely due to local capacity and competition. Marsh noted that large, complex programmes continued to experience small increases across the region, especially when there was a need for facultative capacity. Financial and professional lines pricing rose 12%, down from the 17% in the third quarter, while cyber prices increased 40%. Asia pricing Property insurance pricing rose 3%, down from 5% in the third quarter. Marsh said that elements of insurer competition continued to return, focused on loss-free clients in low-hazard industries, but added that the market remained challenging for clients in cat zones, high-hazard industries and those with poor loss histories. Casualty insurance pricing increased 2%, although capacity continued to be plentiful. But Marsh added that multinational insurers restricted capacity on excess layers, particularly with product recall and product liability exposures. Financial and professional lines pricing rose 17%, with D&O accounting for a significant portion of pricing increases, while cyber remained the most challenging coverage area. Pacific pricing Property insurance pricing increased 8%, and while insurance capacity increased for quality, loss-free clients, challenges remained for high-hazard industries, risks in cat zones and clients with poor loss history, said Marsh. Casualty insurance pricing rose 15%, due in large measure to claims inflation and reduced capacity from some major carriers. Risk selection was more pronounced than previously. Financial and professional lines pricing rose 18%, down from 25% in the third quarter, and the levelling out of pricing in D&O programmes continued, said the broker.

Double-digit increases for global commercial insurance prices in Q4 2021

Rate of increase continues to moderate, says Marsh

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