Global average commercial insurance prices increased 14% in the first quarter of 2020 – but the rate hikes were not due to the COVID-19 pandemic, according to insurance broker Marsh in its quarterly Global Insurance Market Index.
Although the COVID-19 global pandemic had an insignificant impact on pricing in the first quarter, the reported increase was the largest year-over-year increase in the Marsh Global Insurance Market Index since its inception in 2012.
Average price increases were driven principally by increases in property insurance rates and financial and professional lines, Marsh said.
“Pricing was trending higher in the first quarter, prior to any meaningful impact from losses associated with COVID-19. However, COVID-19 will likely have an impact on pricing for the balance of 2020,” said Dean Klisura, president, Global Placement and Advisory Services at Marsh, in comments accompanying the survey.
The survey’s findings included the following:
- The first quarter of 2020 was the tenth consecutive quarter of average price increases.
- Globally, on average, pricing for property risks increased 15%; financial and professional lines rose nearly 26%; and casualty increased 5%.
- Composite pricing in the first quarter increased in all geographic regions for the sixth consecutive quarter.
- The U.S. (14%), UK (21%), and Pacific (23%) regions all experienced double-digit pricing increases. Pricing increases in these regions were largely driven by property, financial and professional lines, and directors and officers (D&O) rates in particular. In the U.S., for example, pricing in the D&O market was up 44%.
Q1 Prices in U.S.
Breaking the report into regions, Marsh said property pricing in the U.S. has increased for 10 consecutive quarters. Other U.S. survey findings include:
- Property rates in the U.S. increased 21% in the first quarter, the highest level recorded since the survey began in 2012.
- Casualty prices in the U.S. increased 5% in the quarter with the excess liability market driving much of the overall casualty pricing movement. Average excess liability rates were up by 11%, although many risks experienced significantly greater increases.
- Auto prices were up 10%, with 80% of clients experiencing an increase.
- Worker’s compensation prices decreased 1%.
- Financial and professional liability insurance rates in the U.S. increased 23%, driven by directors and officers (D&O) prices. Specifically, prices in the D&O market were up 44%, with 95% of clients experiencing an increase.
- Cyber insurance pricing rose 6%, the largest increase since 2016.
Q1 Prices in UK
In the UK, composite prices rose for the 10th consecutive quarter with overall insurance pricing increasing by 21%.
Other UK survey findings include:
- Property prices rose by 10% in the quarter, marking the fifth consecutive quarter of increases.
- General liability coverages generally showed the largest increases, typically in the upper single-digit range.
- Financial and professional liability prices increased 46%.
- D&O prices showed significant increases, with some large accounts experiencing hikes of 100%. Generally, midsize accounts saw smaller increases, but still had prices rise by 50% to 70%.
Q1 Prices in Latin America/Caribbean
Overall insurance prices firmed for the 10th consecutive quarter in the Latin America and Caribbean (LAC) region, increasing by 6%.
Other LatAm/Caribbean survey findings include:
- Property prices in the region increased 9% in the first quarter, marking the third quarter of increases after declining or being stable for the prior five years.
- Casualty prices rose 2%, continuing to be generally stable across the region, with relatively minor increases observed in the last several quarters.
- Chile experienced the largest increases in casualty lines in the region, with increases in the mid-single digits.
- Financial and professional liability prices rose 8% in the quarter.
Q1 Prices in Continental Europe
Overall price increases in Continental Europe (CE) rose by 8%, driven by property and financial and professional lines. Other Continental European survey findings include:
- Property insurance prices in CE rose 9%, the sixth consecutive quarterly increase.
- Prices for catastrophe and non-cat risks increased in most countries, generally in the range of low-single digits to 15%.
- Casualty insurance prices rose 4% in the quarter, the third consecutive quarter of increases, after several years of continuous, but minor, decreases.
- Financial and professional liability insurance prices increased 12% in the quarter.
- Most large countries reported high single-digit to 20% increases for multiple financial and professional lines coverages.
Q1 Pacific Prices
Overall prices increases in the Pacific region rose by 23%, continuing an upward trend that began in 2015. Other Pacific region survey findings include:
- Property insurance prices increased 23% during Q1 2020, the 10th consecutive quarter of year-over-year double-digit increases.
- Double-digit rate hikes were reported for catastrophe and non-cat risks in both Australia and New Zealand where increases exceeded 30% for many clients.
- Casualty pricing rose 8%, a trend that has continued for three years.
- Some casualty risks are receiving increases ranging from 10% to 20%.
- Financial and professional liability prices rose more than 30% in the quarter, marking 11 straight quarters of double-digit increases.
Q1 Asia Prices
Overall composite prices in the Asia region increased 6% from Q1 2019. Other Asia region survey findings include:
- Property insurance prices rose 8%, marking the fifth quarter of price increases.
- Casualty prices were flat in the first quarter. This marked the eighth consecutive quarter of flat prices, following several years of moderate decreases.
- Financial and professional liability prices rose 8%, the largest increase observed in several years and the fourth consecutive quarter of increases.
- Prices increased for D&O, financial institutions, and professional liability in China, Hong Kong, India, Indonesia, Japan, Korea, and Singapore.
- International insurers have reduced capacity in the financial and professional liability lines and held to price increases.
Editor’s Note: All references to pricing and pricing movements in this report should be considered averages, unless otherwise noted.
*This story ran previously in our sister publication Insurance Journal.