Commercial rates in the Australia-dominated Pacific market set a new record for the second straight quarter, rising 33% in the three months to September, according to the latest pricing report from Marsh.

Globally prices surged 20% in the third quarter from a year earlier, the largest increase since Marsh began tracking renewal rates with the Global Insurance Market Index in 2012.

In the Pacific market, the increase was fuelled partly by a continued pullback in insurers’ appetite for directors’ and officers’ (D&O) business, the same factor that drove up region-wide prices by 31% in the second quarter.

The business fallout from the pandemic also added to upward pressure on Pacific renewal rates.

Similar to the previous quarter, renewals for D&O exceeded 100% in many cases and numerous edits were made to policy wordings as a way to mitigate pricing impacts. A number of clients also refused to accept the steep rates quoted by insurers.

Some clients had difficulty getting their desired coverage due to a “notable reduction” in appetite from insurers.

“The third quarter has seen the continuation of the upward trend for D&O, which is now 13 consecutive quarters of double-digit increases,” a Marsh spokesman told insuranceNEWS.com.au today. “What we have seen now is the continued upward trend of what we have warned about.

“Worryingly, we have seen the impact of these consecutive increases reverberate through to SMEs and the not-for-profit sector.”

The financial and professional liability line, which includes D&O business, recorded a 49% jump in prices during the third quarter.

Property pricing rose 31% and casualty 11%.

Marsh says the property line remains challenging as shrinking capacity put insurers in the driver’s seat while the impact of COVID-19 added 3-5% to the price increases.

Within the casualty line, there was a noticeable increase in pricing across most products in the region and major insurers reduced capacity, particularly for accounts with North American exposure.

At the global level property pricing went up 21%, financial and professional 40% and casualty 6%.

In the UK, rates increased 34%, the US 18%, continental Europe 15%, Asia 12% and Latin America 9%.

“Challenging conditions continue to exist across many parts of the insurance marketplace,” Marsh JLT Specialty and Marsh Global Placement Lucy Clarke said. “Uncertainty, particularly related to COVID-19, and loss experience in many lines have both contributed to this three-year trend of increasing insurance costs.

“For many clients these conditions are occurring at a time when they can least withstand them, and are leading many companies to rethink their insurance buying patterns including increasing retentions, reducing limits, and modifying policy terms and conditions.”