Global insurance rate decreases moderated on average for the fourth consecutive quarter, down 3.1 percent (compared to the previous quarter’s decrease of 3.2 percent), according to Marsh’s Global Insurance Market Index – Q4 2016. *
“The last quarter of 2016 marked the fifteenth consecutive quarter in which average rates declined, largely due to a market with an oversupply of capacity from traditional and alternative sources and a lack of significant catastrophe losses,” said Dean Klisura, Global Industry Specialties and Placement leader at Marsh, in a statement accompanying the index.
Other highlights of Marsh’s fourth-quarter report include:
- The fourth quarter of 2016 marked an entire year and four consecutive quarters in which the average rate of decline for global rates moderated – the first since Marsh initiated the index in 2012.
- Global property rates declined on average by 4.2 percent in Q4, compared to a decrease of 3.9 percent in Q3.
- The rate of decline for global casualty rates moderated to 1.9 percent from the previous quarter when rates declined by 2.4 percent on average.
- Financial and professional lines decreased on average by 3 percent, a similar level to the prior quarter (2.9 percent).
- U.S. composite insurance rates were down 3 percent in Q4, which is in line with the global rate. This was driven in large part by decreasing rates, on average, in property insurance.
- U.S. cyber liability rates continued to increase for the sixth consecutive quarter, although the rate of increase moderated to 1.4 percent from 5.2 percent in Q3 2016.
- The number of U.S. clients purchasing cyber insurance increased 25 percent from 2015 to 2016 across all industries, “with the greatest overall take-up in healthcare, communications, media and technology.”
- UK composite insurance rate decreases, on average, were greater – at 4.8 percent – than the global rate of decline, driven by soft markets across all major commercial insurance lines.
- Continental Europe’s composite rate decreases, on average, were greater than the global rate of decline – at 4.2 percent – driven in large part by decreasing property insurance rates.
- Latin America’s casualty, financial and professional liability insurance rates increased, on average, during Q4, which contributed to composite rate decreases that were more moderate than any other region – at 0.5 percent. Increases in average casualty insurance rates “were largely due to a rise in auto insurance prices, specifically in Colombia and Mexico, where Marsh has a significant market share.”
* Marsh described its Global Insurance Market Index as a “proprietary benchmark of commercial insurance premium rate change at renewal, representing the world’s major insurance markets and comprising 90 percent of Marsh’s premium.”