Q2 rates up 28% in UK and 13% in Europe but hardening slows, finds Marsh

Broker expects pricing to moderate further this year

Commercial insurance prices increased 28% in the UK during the second quarter, the biggest rise of all regions globally, and by 13% in continental Europe, according to Marsh’s Global Insurance Market Index that reveals hardening, on the whole, is moderating.

As reported in Commercial Risk last week, the index shows that global rates were up 15% year on year in Q2 and for the 15th consecutive quarter, but the pace of change slowed for the second quarter running.

Increases moderated across all regions during the quarter, apart from continental Europe where they were flat.

UK buyers suffered the biggest increase at 28%, but this was down from a rise of 35% in the first quarter and 44% in the Q4 2020.

UK property prices were up 15% Q2, following increases of 18% and 24% in the preceding two quarters. Marsh says larger UK organisations generally experienced property price increases ranging from 15% to 20%.

UK financial and professional lines (finpro) saw average prices increases of 57% in the second quarter, largely driven by D&0. But again increases are moderating after a rise of 71% in Q1 and 90% in the last quarter of 2020.

Marsh says a number of new insurers entered the D&O market, which seems to have reached its pricing peak, although some clients saw triple-digit increases.

UK cyber insurance rate increases typically ranged from 35% to 40% but were generally more than 50% by the end of the quarter, with some clients seeing triple-digit increases, the broker adds. Increases were driven by ransomware claims, it says.

Casualty price increases in the UK were flat in Q2 at 7% and have risen by a similar amount for the past year.

Meanwhile, property insurance prices in rose 18% in continental Europe during the quarter. This is above the global average of 12% but Marsh says there was a softening of rates in some sectors.

It adds that insurer competition and capacity increased, particularly for new business, and this trend is expected to continue into 2022, barring unforeseen changes in conditions. Insurers continued to apply changes in wordings and sought to apply exclusions, particularly for communicable disease and cyber, Marsh explains.

Continental Europe finpro pricing increased 20% in the second quarter, after a rise of 23% in the prior period.

Average D&O pricing increases in the larger countries such as France, Germany and Italy ranged from 10% to more than 30%, with higher increases observed on major D&O programmes in distressed sectors or with US exposure. Marsh says insurers remained selective in deploying D&O capacity.

Sizeable rate increases continued for European cyber, with carriers reducing exposure – a trend expected to continue for the remainder of 2021, barring unforeseen changes.

European buyers faced average liability rate increases of 5% in Q2, again fairly flat compared with rises during the past year.

Elsewhere around the world, the index shows the Pacific region saw a 23% rate increase in the second quarter, down from 29% in Q1, while the rate of increase in the US was 12%, down from 14%. Prices were up 6% in Asia, down from 8%; and in Latin America and the Caribbean were up 4% from 5%.

Global property insurance rates were up 12% on average in the second quarter, another increase but again down on 15% rise in Q1. This too suggests that the property market hardening has stopped accelerating, after rate rises of 20% in the last quarter of 2020, 21% in Q3, 19% in Q2 and 15% in Q1.

The index also reveals that average global finpro rates were up 34% in the last quarter, driven in part by steep cyber insurance increases. This follows an increase of 40% in the first quarter of 2021.

Global casualty rates were up 6% in the second quarter of this year. The rises here have been pretty consistent during the past year.

Commenting on the findings, Lucy Clarke, president of Marsh Specialty and Marsh Global Placement, said: “Clients continue to face a challenging risk and insurance landscape as the global economy emerges from the pandemic. Although we expect continued pressure on pricing, especially in loss-affected lines, we also expect the general trend of moderating price increases to continue through the rest of the year.”

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