Marsh index reports growing global and European commercial insurance price increases

Average global commercial insurance prices increased 3% in the first quarter of 2019, with prices up 2% in continental Europe and 2.9% in the UK, according to Marsh’s Global Insurance Market Index. It is the largest global increase since the index began in 2012 and the sixth consecutive quarter of rising prices. The index reveals that composite pricing in the first quarter of 2019 increased in all global regions for the second consecutive quarter. Global average commercial insurance prices rose by 2% in Q4 2018. Last quarter’s increase of 3% was driven by rate change in property and directors and officers (D&O) coverages. Globally, pricing for property risks increased by almost 5% on average, slightly above the rates recorded in the previous four quarters. However, casualty prices declined nearly 1% on average, continuing a trend started in 2013. Average pricing in financial and professional lines increased by almost 6%, with all global regions experiencing a rise, primarily driven by increases in D&O insurance. Dean Klisura, president, global placement at Marsh, said: “While 3% is the largest average increase in insurance pricing we have seen since the index began in 2012, market capacity remains strong in most products and geographies.” Marsh said: “Overall, the market remained stable, with prices fluctuating within a relatively narrow range on average across most products and geographies.” Average rates were up 2% in continental Europe in Q1. It is the region’s second consecutive quarter of price increases, after a rise if 1% in Q4 2018. Property pricing increased by 4.2%, marking the fourth quarter of rises in the past five years. Marsh said the increase was “largely attributed to a reduction in available capacity”. Financial and professional coverage pricing increased 1.7%, the first back-to-back quarterly increases in five years, after a rise of 0.9% in the last index. However, casualty pricing declined 0.9% in continental Europe last quarter. Pricing has fallen in 22 of the last 24 quarters for such risks. Overall, average pricing was up 2.9% in the UK. This follows a rise of 1% last time around and is the sixth consecutive quarterly increase. Property pricing in the UK increased by 3%, with large clients typically experiencing higher rates of increase than small to mid-size firms. Financial and professional liability pricing in the UK increased by 6.7%, driven by D&O rises for Marsh clients with US- and/or Australia-exposed or listed risks. Casualty pricing in the UK declined 2.7% overall, the fifth consecutive quarter of decline. But Marsh said initial signs of insurers holding firm on pricing and/or tightening terms in casualty “are starting to appear”. The largest price increases in the index are seen in the Pacific region. Here, overall insurance pricing in the first quarter of 2019 increased by 16%, continuing the region’s steady pricing increases of the last two years. The Pacific region has seen average prices increase for nine consecutive quarters. Property insurance pricing in the region increased by more than 14%, while casualty lines composite pricing increased by 5.7%. The biggest increase was seen in financial and professional liability pricing – up more than 20%. This continue a string of double-digit increases during the past seven quarters. Marsh said the Pacific region’s financial and professional liability market continued to be difficult for listed company D&O risks. Insurance pricing in the first quarter of 2019 increased by 1.1% in the US, the highest rise since 2013, the index states. Property pricing increased 4%, but casualty pricing declined 1.7% and has decreased in all but one quarter since 2014. Marsh explained that large, multi-layered property programmes with gross written premium greater than $1m led the pricing increases, with costs up nearly 7%. Financial and professional liability insurance rates in the US increased by 2.8% in the last quarter, driven by pricing in D&O liability. D&O pricing for public companies increased nearly 6%, with 77% of clients experiencing an increase, the index shows. Latin America saw pricing increases in all major product lines, with overall insurance pricing growing by 1.5%. Pricing is up here for the sixth consecutive quarter. Property pricing increased slightly, while casualty prices increased by 3.6%. Financial and professional liability pricing increased 2.1%, the region’s seventh consecutive quarterly increase. Overall pricing increased slightly (0.4%) in Asia, marking the seventh consecutive quarter of relatively minor pricing movements. Property pricing was up 0.6%, and casualty pricing declined by 0.4%. Financial and professional liability pricing was up 0.2% in Asia. This marked the firstback-to-back quarterly increases in more than six years. Marsh said pricing was influenced by the deteriorating global market and carriers’ efforts to achieve pricing adequacy while reducing capacity. TheMarsh Global Insurance Market Indexmeasures 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.

Marsh index reports growing global and European commercial insurance price increases

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