European rates up overall but financial and cyber lines falling: Marsh

European insurance rates rose by a further 3% in the first quarter of 2024 across the board, but the softening in financial lines and cyber continued, according to Marsh’s latest quarterly index. In continental Europe, excluding the UK and Ireland, property insurance rates rose 5% compared to a 7% increase in the last quarter of 2023. Marsh said that underwriters “scrutinised” natural catastrophe-exposed organisations, although capacity was generally available. “Companies with natural catastrophe exposure generally saw above-average price increases, capacity reductions, increased deductibles, and scrutiny of limits,” said the broker. Capacity and price challenges also continued for heavy occupancy or distressed businesses, such as those with losses and/or those perceived by insurers as having substandard risk management, it added. Long-term agreements (LTAs) were offered in many cases. While ongoing political and societal tensions drove some property insurers to seek sub-limit adjustments and coverage restrictions in strikes, riots and civil commotion (SRCC) coverage, noted Marsh. European casualty insurance rates increased 5% overall, based on the index. “Rates were generally stable across Europe, with the exception of the Nordic countries, where substantial increases were seen on complex and US-exposed risks,” said Marsh. The broker noted concerns over exclusionary language related to biometric data and data privacy, and questions relating to per- and polyfluoroalkyl (PFAS) substances. Overall, capacity reductions by major insurers eased in casualty. European financial and professional lines rates declined 7% in the first quarter of this year. “For directors and officers (D&O) liability insurance, capacity and insurer competition increased. Many large D&O programs renewed with LTAs, some with a slight premium decrease factored in for the second year. Some clients reinvested premium savings to increase limits on other programs, such as crime,” said Marsh. Cyber insurance rates fell by a further 7% in Q1, according to Marsh. Insureds with higher revenues over €250m and effective cybersecurity controls typically experienced greater rate decreases, said the broker. “The downward movement in rates was observed primarily in excess layers, although some larger companies also found savings at the primary and first excess program layers,” it said. “Many clients adjusted program structures, for example, increasing limits or reducing retentions. The awareness of cyber risks has also led to an increase in new clients entering the market. Underwriters paid particular attention to digital supply chain management,” reported Marsh. Insurance rates in the UK declined 2% overall in the first quarter of 2024, with property rates up 2%. “New market entrants contributed to increased competition and an increasingly competitive rating environment, particularly for low- to medium-hazard industries. Underwriters emphasised risk and claims management and exercised caution for organisations in heavy occupancy industries or with distressed business profiles. LTAs were generally available,” said Marsh. UK casualty insurance rates increased 2%, with general liability rates falling for the second consecutive quarter. “Overall market capacity increased, although capacity for US exposure is limited as underwriters maintained focus on claims cost inflation. Auto liability remained challenging,” said Marsh. Financial and professional lines rates declined 9% for UK risks, according to the quarterly index. “D&O rates continued to decrease, typically in the 10% to 15% range. Financial institutions rates decreased in the high single digits. The commercial crime market saw some insurers increase their appetite and capacity,” said Marsh. Cyber insurance rates fell a further 7% in the UK during the first quarter. “The current decrease in cyber rates can be attributed in part to conditions during the challenging market period, which was characterised by frequent and severe losses and concerns regarding cybersecurity controls. Since the second half of 2022, competition has increased, driving improved rates and coverage,” concluded Marsh.

European rates up overall but financial and cyber lines falling: Marsh

Quarterly index positive news for risk managers

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