Rate increases level off but Marsh doesn’t think market ready to soften

Global insurance rates rose by 3% in Q3, the same as the previous quarter and in line with the last few , according to Marsh’s Global Insurance Market Index, but despite price rises levelling off, the broker doesn’t think the market is at an inflection point and ready to soften just yet. Property insurance rates increased 7% in the third quarter compared with 10% in Q2, said John Doyle, president and CEO of Marsh McLennan, on an earnings call. Martin South, president and CEO of Marsh, explained that casualty pricing was up 3%, the same as the previous two quarters. “So, we're not seeing an acceleration [in casualty]. But I would say we're hearing a lot more talk from carriers about pressures on pricing and social factors and some of the nuclear verdicts that are out there, and we're keeping our clients closely posted on those,” he said. South added there was “some softness” in Finpro lines where rates came down by 6% in the third quarter, compared to a fall of 8% in Q2. Cyber rates were down 2% compared to a 1% rise in the second quarter. South said overall the casualty market is “relatively calm”. And although overall global rate increases are stabilising, South doesn’t think the market is about to soften. “Just to level set, we're in the 24th consecutive quarter of rate increases… and I don't think we're at an inflection point when it comes to pricing,” he said. But he stressed that the pricing cycles across different geographies and product lines are beginning to show a mix of “strengths and weaknesses depending on the combination”. Doyle said the cost of risk is still increasing and noted that there are concerns both in the insurance and reinsurance markets about rising loss costs. Dean Klisura, president and CEO of Guy Carpenter, said property catastrophe reinsurance buyers can expect pricing to remain firm and vary by region. He expects “challenging market conditions” to persist for property cat reinsurance at the upcoming 1 renewals, driven by inflation. “It won’t be what we saw last year in the US and in Europe, but we think that firmness will be there,” he said. “We do expect additional capacity and an increased appetite from reinsurers to write more business, particularly at higher attaching property/cat layers,” he continued. Adding: “But I think the key is we expect reinsurers to continue to exhibit that discipline on attachment points, pricing and terms, and I don't see anything going backwards.” However, Marsh is confident that property cat capacity will remain “adequate”. “We think it will be a more manageable renewal for our clients, without that significant supply, demand imbalance and dislocation that we saw last year. And we expect increased demand for our clients to buy more reinsurance and particularly key regions like Europe,” said Klisura. He said casualty reinsurers have expressed concern about prior year loss development in US casualty, driven by economic and social inflation. “We do expect some downward pressure from reinsurers on seating commissions for our clients with quota share contracts and certain casualty lines. But in casualty, we expect capacity to remain adequate,” said Klisura.

Rate increases level off but Marsh doesn’t think market ready to soften

Reinsurance renewals set to be disciplined but more orderly

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