Commercial insurance rates continued their global decline in the 2015 second quarter, a trend driven by a continued abundance of global capacity and a lack of large insured loss activity, Marsh said in its latest Global Insurance Market Quarterly Briefing.
As of Q2, there have been nine consecutive quarters of overall rate declines, Marsh said. One exception – specialized coverages – led by a cyber insurance market that continues to firm up. Marsh said that the Asia-Pacific region saw the largest overall rate decreases, followed by the U.K., Continental Europe, Latin America and then the U.S.
Broken down: commercial casualty rates dipped at a more moderate rate than property, ranging from flat to a 5 percent decline dependent on the market. Property insurance dipped more than 5 percent on average, Marsh said.
Marsh’s reported noted that the Asia-Pacific region saw renewal rate declines greater than 7.5 percent on average. In Continental Europe, the average declines ranged from 5 percent to 7.5 percent, with the U.K. coming in at slightly worse averages. In Latin America & the Caribbean produced rate declines that varied on average from 2.5 percent to 5 percent. The U.S. saw the least declines, with renewal rates staying flat or dipping to 2.5 percent on average.
One bright spot: transactional risk insurance, particularly for M&A deals. Marsh said that demand for the specialty coverage continued to grow through the first 6 months of 205, jumping by 15 percent overall compared to the same period last year in terms of limits placed by Marsh.
“The demand for transactional risk insurance on M&A transactions continues to grow rapidly, as competition among acquirers continues to remain intense,” Karen Beldy Torborg, global practice leader for Marsh’s private equity and M&A sales practice, said in the report.
She added that dealmakers in the private equity and corporate space are “increasingly using insurance capital to get deals over the line, and we don’t see this trend subsiding anytime soon.”