Global commercial insurance prices rose in the second quarter of 2018, marking the third consecutive quarter of increases, according to Marsh’s “Global Insurance Market Index.”
These average increases were driven by property insurance, which continued to be affected by 2017’s catastrophe losses, as well as financial and professional lines, said Marsh’s quarterly market index report. The report measures commercial insurance premium price changes at renewal, covering the world’s major insurance markets and comprising 90 percent of Marsh’s premium.
Globally, property insurance prices increased 2.3 percent, on average, during the second quarter, which was slightly less than that observed in the previous two quarters, the report said.
Financial and professional line prices increased 3.3 percent on average, with much of the increase due to directors and officers (D&O) insurance prices in multiple regions.
Casualty prices declined an average of 1.4 percent around the globe, continuing a trend of annual rate declines, stretching back to 2013,
Australia again had the largest price increases, at an average of 13 percent.
While average prices trended up overall (driven primarily by the UK and Australia), pricing decreased slightly in Continental Europe and Asia.
“The global property insurance market continues to be impacted by last year’s losses, and we are now seeing increases in financial and professional lines pricing in several regions,” said Dean Klisura, president, Global Placement and Specialties at Marsh. “However, overall pricing is generally stable across all lines of business and market capacity remains strong.”
The report also covered regional trends, including:
- United States. Insurance prices in the U.S. were flat in the second quarter of 2018, following three-plus years of composite decreases. Average property rates in the U.S. increased 3 percent, the third consecutive quarter of low-single digit increases, driven by catastrophe-exposed risks and large layered programs. More than 50 percent of property clients experienced price increases. Average U.S. cyber insurance prices increased in the quarterly index by 2.1 percent.
- United Kingdom. Average composite insurance prices in the UK rose for the third consecutive quarter, a Q2 increase of 0.8 percent. Prices increased, on average, by 5 percent across financial and professional lines, driven by increases in D&O and professional indemnity. Property pricing decreased, on average, for the second straight quarter. All major casualty line coverages saw a decrease in average pricing for a second quarter.
- Continental Europe. Composite insurance prices in Continental Europe decreased 1.5 percent, on average, in the second quarter, counter to the global trend. While competition for good quality risks drove price decreases, most reductions were modest. Casualty rates dropped by 1.4 percent in Q2, which slowed from the prior quarter when rates dropped by 1.6 percent. Property prices declined by 1.3 percent, after two consecutive quarters of price increases.
- Australia. Average composite prices increased 13 percent, more than any other region, with increases seen across all major product lines. Financial and professional liability prices rose significantly with the largest price increases seen for D&O coverages as a result of the challenging claims environment and reduced capacity. Financial institutions prices rose 20-25 percent, on average, following several large losses and an ongoing Banking Royal Commission review. Casualty pricing increased in the low-to-high single digits for all product lines.
- Asia. Average composite prices in Asia declined in the second quarter by 0.4 percent, albeit at a slower rate than observed in the last three years. (Composite prices in Q1 2018 dropped by 1.8 percent). Average property insurance rates decreased by 0.4 percent, compared to a drop of 1.4 percent in the Q1 2018. Casualty pricing decreased in the quarter (0.5 percent), a lower rate than those reported since early 2014. (The Q1 drop was 2.7 percent).
- Latin America. Average composite insurance prices in Latin America increased for the second quarter by 0.3 percent, compared to Q1’s increase of 0.8 percent. Overall, LatAm’s Q2 casualty price increases moderated from prior quarters with average prices rising by 1.6 percent, compared with 4.3 percent for Q1. The report said casualty price increases across Latin America are tied primarily to auto rate corrections, with rate hikes seen for eight consecutive quarters. Financial and professional liability rates saw an acceleration of increase at 3.2 percent, driven largely by D&O losses.
*This story ran previously in our sister publication Insurance Journal.