Insurance rates rise in all regions for first time since 2012: Marsh

Global average commercial insurance prices rose by 2% in Q4 2018, marking the fifth consecutive quarter of increases and the biggest rise since Marsh started its Global Insurance Market Index in 2012. All regions reported pricing increases during the same quarter for the first time, with continental Europe and the UK both recording rises of more than 1%. The global price rise in Q4 was driven largely by property and financial and professional lines. The cost of casualty cover fell again. The Pacific region saw the steepest price rises, with an average increase of 16%. However, the better news for buyers is Marsh said the market remained “stable” overall, with prices fluctuating within a relatively narrow range across most risks and geographies. Dean Klisura, president of global placement and specialties at Marsh, said: “Although the last quarter of 2018 saw average prices increase in all regions, the increases were generally modest. While pricing for property and financial and professional lines has increased globally for five straight quarters, market capacity remains strong in most geographies.” The Marsh Global Insurance Market Index measures commercial insurance premium price change at renewal. It represents the world's major insurance markets and comprises nearly 90% of Marsh’s premium. The pricing change captures year-over-year pricing movement, measured quarterly. The pricing change metrics are based on a combination of statistical data and surveyed opinions from Marsh placement leaders worldwide. The average global price rise of 2% recorded in the last quarter of 2018 follows on from a 1.4% increase in Q3 and 1.2% in Q2. Global property pricing was up 3.6% in Q4, slightly above rises recorded in the previous three quarters. Financial and professional liability price increases continued to accelerate, up 4.7% on average. This follows a rise of 3.3% in the preceding two quarters. Average global casualty prices declined 1.1% in Q4, continuing a trend of year-over-year declines stretching back to 2013. Continental Europe saw the second highest rate increases of any region, up 1.5%. Latin America came next with 1.4%, followed by the UK on 1% and the US and Asia both on 0.4%. The Pacific saw big increases again. Average rate increases have been above 10% in the region for some time. Continental Europe saw average prices rise for the first time since 2013. Average property pricing was up 3.1%, firming on both cat and non-cat risks. Casualty pricing declined by 0.3%, but some lines, such as motor, reported minor increases. Financial and professional coverage pricing increased 0.9%, the first quarterly increase in several years. The average 1% rise in the UK marks the fifth straight quarterly increase. Property pricing, however, fell by 1.1% and in line with the rest of 2018. Casualty was down 3.1%. But financial and professional liability pricing was up by 6.7%, primarily driven by D&O on US and Australian listed risks, said Marsh. Marsh also noted that UK professional indemnity and cyber coverage pricing generally ranged from flat to increases of 10%. In the US, pricing has been pretty stable for the past year. But property was up 3.8% in Q4 and has increased each month since October 2017. Marsh said that at 7%, large layered programmes with gross written premium greater than $1m led the pricing increases. US casualty pricing declined 2%, and has now decreased in all but one quarter since 2014. Financial and professional liability insurance rates increased by 1.5% in the US. It is the fourth consecutive quarterly rise. Public company D&O pricing was up 3.4% in Q4, with increases observed on 65% of accounts. Cyber pricing declined 0.6% and has fluctuated within a narrow band of down 2% to up 2% since 2016, noted Marsh. Prices went up in Latin America for the fifth quarter in a row. Property pricing increased by 0.5%. It is only the region’s second quarterly property increase in the last six years. Latin American casualty prices increased by 2.2%. This was primarily a result of motor lines that have seen increases following greater claims frequency/severity and currency devaluations, said Marsh. The region’s financial and professional liability pricing increased 7.2%, the sixth consecutive quarterly increase. D&O liability and medical liability drove prices higher. Asia’s 0.4% composite increase is its first since late 2014. Property was up 0.7%, representing only the second quarterly increase in four years. Much of the Q4 increase was observed on cat-exposed risks, said Marsh. Casualty pricing declined 0.5% in Asia, continuing to moderate towards a flat or stable pricing trend that started in late 2017. Financial and professional liability pricing increased in Asia, with the composite rate up for the first time since 2012 at 0.4%. Marsh said the average 16% price increases in the Pacific region was once again driven by Australian markets. The Pacific region has seen price increases every quarter since 2016. Property insurance pricing increased by 14.5%, the fourth consecutive quarter of year-over-year double-digit increases. Marsh said pricing for both cat and non-cat risks rose in Australia and New Zealand, with many increases greater than 10%. Casualty lines pricing in the Pacific region increased by 5.7%. Financial and professional liability pricing increased by more than 20%, continuing a string of double-digit increasesduring the last six quarters. Marsh said pricing and deductibles increased substantially, with D&O and financial institution pricing increasing by as much as 30% on some risks in both Australia and New Zealand. Marsh’s findings echo the comments of insurance buyers and brokers CRE has spoken to, who said there are finally signs that the insurance market is hardening. In recent results presentations, insurers have also talked about price increases during the year and in the last quarter of 2018.

Insurance rates rise in all regions for first time since 2012: Marsh

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