European buyers faced moderating rises in Q3 as market looks to have peaked, says Marsh

Price increases for commercial insurance in continental Europe and the UK moderated during the last quarter, finds Marsh’s Global Insurance Market Index, which suggests price increases peaked in the fourth quarter of last year at 22%. The average year-over-year rate increase in continental Europe was 10% in Q3, down from a rise of 13% in the first two quarters of this year and 14% in Q4 2020. Average rate rises in the UK stood at 27% in the quarter, down from 28% in Q2 and 35% in Q1. This from a peak of 44% in the fourth quarter of last year. Increases fell to 17% in the Pacific region from 23% in Q2, down to 2% from 4% in Latin America and the Caribbean, and were steady in Asia at 6%. The only place prices didn’t moderate was the US, where rates increased by 14% from 12% in the previous quarter. Marsh said this was driven by substantial increases in cyber insurance and a moderate increase in property and casualty rates. As reported by Commercial Risk Europe last week, Marsh index’s global average commercial price rise was 15% in the third quarter, which is the same as in Q2. This follows 18% in the first and 22% in the last quarter of 2020. Marsh McLennan’s president and CEO Dan Glaser said during the firm’s results call that there is little sign of the hard market ending anytime soon. But the broker stressed on publishing its full index that price increases moderated across regions in the last quarter, due to a slower rate of increase in property and D&O lines, and expects this trend to continue. Lucy Clarke, president, Marsh Specialty and Marsh Global Placement, said: “While the risk and insurance landscape remains challenging around the world, we expect rates to continue to moderate in most lines. “However, the pressure on rates in cyber insurance is likely to continue,” she added. Cyber insurance pricing continued to diverge from the moderation trend and almost doubled in the last quarter. In the US, prices increased 96% in Q3, from 56% in the previous quarter, and were up 73% in the UK, from 35% in Q2. Cyber rates were up 60% in continental Europe. Marsh said these conditions were driven by the frequency and severity of ransomware claims. The index reveals that global property rates were up 9% in the third quarter, with increases continuing to fall. Property rates were up 12% in Q2, 15% in the first quarter and 20% in the last quarter of 2020. Casualty rates were up 6% in the third quarter and have been seeing this size of quarterly increase for a while now. Global financial and professional lines were up 32%, driven in part by the near doubling in cyber rates. This is down a touch from 34% in Q2, which followed a rise of 40% and 47% in the preceding two quarterly periods. Continental European buyers faced average property rises of 12% in the third quarter, down from 18% in the preceding quarter, according to the index. Marsh said competition for new business increased among European domestic carriers. It added that the significant European flood losses are likely to destabilise the market in the near term, particularly in affected areas. Casualty insurance pricing increased 5% in continental Europe during the third quarter, with rises pretty stable for a couple of years now. Financial and professional lines pricing increased 14% in Q3 but moderated from 20% in the preceding period. Marsh said there was some stability in the European D&O market, driven by increases in insurer competition and capacity. However, major D&O programmes in distressed sectors or with US exposures continued to affect pricing, with sizeable rates increases, it added. Property pricing increased 11% in the UK during Q3. Marsh said larger organisations generally experienced price increases ranging from 10% to 15%, and deceleration in the rate change compared to recent quarters. UK casualty insurance costs rose by 7% with the outlook stable for the next renewal period, added the broker. Meanwhile, financial and professional lines pricing increased 54% in the UK, largely due to D&O rises. But the rate of D&O increases fell “significantly” from 121% in the second quarter to 61% in the third, as insurers showed increased appetite and competition, said Marsh.

European buyers faced moderating rises in Q3 as market looks to have peaked, says Marsh

Want to read this article?

Read Next

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Want to read this article?

Read Next

Vast majority of global wind and solar energy assets unprotected from fire

Ardonagh to acquire PSC Insurance in Australia

Baltimore bridge supply chain insurance losses likely

Munich Re Q1 net result up 68%, buoyed by ERGO international growth and April renewals

New cyber insurance endorsement from AXA XL in US

Related Articles