Insurance price rises moderate in Europe during Q1

Continental European commercial insurance prices rose by 5% in the first quarter of this year compared to 6% in each of the last three quarters, according to Marsh’s latest Global Insurance Market Index. Global commercial insurance pricing rose 4% in Q1 2023. This is the same as the prior quarter, as the global moderating trend ran out of steam, Marsh’s latest figures show. This was the 22nd consecutive quarter in which composite pricing rose on a global basis, continuing the longest run of increases since the inception of the index in 2012. Increases peaked at 22% in the fourth quarter of 2020. Property insurance pricing in continental Europe rose 7%, the same as in the prior quarter. Marsh said that price increases in this line were mainly driven by changes in the reinsurance market during January treaty renewals. “Inflation continued to play a role in pricing increases. Clients with adequate technical pricing, reasonable retention levels, good risk quality, and soft occupancies attracted more competitive terms, especially for non-cat perils,” said the broker. “Cat-exposed insureds with a poor risk profile, high hazard occupancy (such as chemical or food), and losses generally experienced capacity challenges and higher pricing,” added the broker. Marsh said that property insurers were cautious around risk mitigation controls, in addition to terms and conditions such as deductibles, non-physical damage, cyber and communicable disease exclusions. Insurers also focused on territorial exclusions for Russia, Belarus, and Ukraine. Continental European casualty insurance pricing rose 4% in Q1, compared to 6% in the prior quarter. This marks the 15th consecutive quarter of increases. US exposure and social inflation remained key drivers for insurer risk appetite. Loss-impacted renewals were “challenging” for primary placements, with excess layers only slightly affected, Marsh said. It added that there was increased competition in some European countries for casualty business, driven by new market entrants and some existing insurers seeking growth. The broker said that there was a notable difference between mid-size clients, which started to see casualty price reductions and stable capacity, and larger organisations, which saw pricing stabilisation but capacity reduction. Financial and professional lines pricing rose 3% in continental Europe during Q1, compared to 2% in the prior quarter, according to Marsh. D&O pricing generally stabilised or decreased, particularly for excess coverage, it said. Companies’ ESG risk profiles continued to rise up the agenda of underwriting priorities, according to the broker. Long-term agreements have also been appearing again at renewals, it explained. Pricing for European financial institutions was generally stable, with some reductions and some low single-digit increases, depending on risk profile and loss history. Crime renewal terms continued to stabilise, said Marsh. Cyber insurance pricing increases moderated quite dramatically in Europe in Q1, down to 5% from 13% in the prior quarter, as new capacity entered the market. “Factors driving cyber pricing included fewer claims around privacy in Europe, a decrease in ransomware claims frequency and severity since the second half of 2021, insurers looking to maintain share and grow their cyber business in 2023, and new capacity entering the market,” commented Marsh. “Retentions tended to be stable in the quarter. Risk information remained important, particularly regarding the ability of insureds to mitigate ransomware threats,” it added.

Insurance price rises moderate in Europe during Q1

But reinsurers drive hardening property market

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