Global rates down yet again but reductions continue to decrease: Marsh

Global insurance rates continued to fall in Q2 2017 but the size of decreases fell for the sixth consecutive quarter, down 2.2% from a peak of 5% at the end of 2015, according to latest figures from Marsh. The broker warned that there are signs of rates hardening in some territories and lines, notably the Pacific and Latin American regions. According to Marsh’s Global Insurance Market Index, which measures pricing at commercial insurance renewals, overall rates in continental Europe fell by an average of 2.3% in the second quarter of 2017, compared with 4.3% in Q1. In the UK, composite rates were down 4.2%, compared with 4.8% in the previous two . When it comes to product lines, global property rates declined on average by 2.8% in the second quarter compared to a decrease of 3.6% in the first, according to Marsh. Financial and professional lines declined by 2.1%, compared with 2.6% in the previous quarter. However, the trend for ever-decreasing rate reductions was not seen in global casualty business. Here, average rates fell by 1.7% compared to 0.6% in the first quarter. Marsh said this was largely driven by stronger declines in US casualty pricing. The overall 2.2% Q2 fall in global insurance renewal rates compares with an average reduction of 2.3% in the first quarter. While this represents continued good news for readers of Commercial Risk Europe, Marsh’s figures show that reductions have moderated for each of the last six quarters. The broker also warned of tough spots for buyers in some areas. “The second quarter of 2017 marked the 17th consecutive quarter in which average rates declined, largely due to a market with significant capacity and a competitive underwriting environment. However, we are seeing signs that rates may be starting to firm in some geographies and some products, primarily in the Pacific region (property, casualty, and financial and professional lines) and Latin America (casualty),” said Dean Klisura, global industry specialties and placement leader at Marsh. With average composite rates down by 2.3% in continental Europe and 4.2% in the UK, there was also good news for buyers in the US where rates were down 2.6% in Q2, compared to 1.5% in the previous quarter, and Asia, where rates were down 3.2% from 3.1% in Q1. But in Latin America overall rates were down just 0.4% in the second quarter, compared with a 2.3% reduction in the first. In the Pacific, average rates went up by 6.3% after increasing last quarter for the first time since 2013. In continental Europe, average property rates declined by 1.9% in the second quarter compared to 5.3% in Q1. Casualty rates were down to 3.1% from 4% in the previous quarter and financial and professional liability rates were down to 1.9% from 2.1%. Renewal rates fell in the UK across all major product lines, finds Marsh, although the average rate of decline moderated in casualty from 4.2% to 1.7%. The overall renewal rate reduction in the US was driven largely by casualty lines, which declined 2.3% on average, after rising by 0.4% in the first quarter. The change in casualty lines pricing was largely due to an increase in the rate of decline for workers’ compensation and a smaller, continuing increase in auto liability pricing, said Marsh. General US liability renewal rates also declined in the second quarter after posting a slight increase in the previous period. In Asia, average property rates decreased by 2.4%. Financial and professional liability rates fell by 3.4%, while casualty rates continued to decrease at a moderate pace, down by 5.2% in Q2. Latin American casualty insurance renewal rates increased by 6.1% in the second quarter, marking the fourth consecutive quarter of rises. Property renewal rates continued to decline, on average down 3.6% in Q2, though at a more moderate rate than the 5% recorded in the previous quarter. Average rates increased across all three product lines in the Pacific during the second quarter. Property rates in the region increased by 7.5% on average, financial and professional liability rates by 6.7% and casualty by 2.7%, Marsh figures show.

Global rates down yet again but reductions continue to decrease: Marsh

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