Marsh’s latest price index released today shows commercial rates in the Pacific region rose at a weaker pace for the third straight quarter, confirming the broker’s earlier assessments that rate increases in the Australia-led market have peaked.

Pacific pricing went up 17% in the third quarter of this year, less than the 23% rise in the second quarter and 29% increase in the first, according to the Marsh Global Insurance Market Index. In the December quarter last year, prices rose 35%.

“We expect pricing to continue to rise throughout the year, but at a slower pace,” Head of Global Placement Asia Pacific John Donnelly said.

“We believe this trend has now been established in the market.”

Financial and professional lines rates rose 25%, moderating sharply from 37% and 48% in the second and first quarters.

While the 25% rise represents 21 straight quarters of double-digit hikes, Marsh says the directors’ and officers’ (D&O) product class is seeing a “levelling out” in pricing.

The broker says this comes amid developing competition, particularly for excess layers. This has led to improved pricing for some large clients.

But professional indemnity rates rose again as capacity tightened, as did cyber pricing, mirroring global trends.

Marsh says cyber pricing conditions in the Pacific market and globally “continue to diverge from the moderation trend” as insurers face increases in frequency and severity of claims, especially in relation to ransomware.

“Cyber premiums increased dramatically, in line with the global trend,” Marsh said. “Capacity shrunk and many programs were unable to purchase historical limits.”

Pacific property rates rose 11% in the September quarter, down from 14% in the preceding period and casualty went up 15%, compared with 18% in the June quarter.

Mr Donnelly says in property, difficulties remain for high-hazard industries, risks in catastrophe zones and clients with poor loss records.

Globally commercial rates grew 15%, similar to the June quarter but the pace of increase continues to moderate in many lines of business and in most geographies.

“This trend may suggest that pricing increases peaked in the fourth quarter of 2020, at 22%,” Marsh said.

By region, US prices rose 14% from 12% in the June quarter and UK recorded a weaker increase of 27% from 28%.

The increase in property pricing globally slowed to 9% from 12% in the preceding period, casualty remained at 6% and financial and professional moderated to 32% from 34%.

“While the risk and insurance landscape remains challenging around the world, we expect rates to continue to moderate in most lines,” Marsh Specialty and Global Placement Lucy Clarke said.

“However, the pressure on rates in cyber insurance is likely to continue.”

US cyber spiked 96% and in the UK 73%, up sharply from 56% and 35% in the second quarter.

Marsh says the US cyber rate increase represented the biggest hike since 2015, attributing the hardening conditions to the frequency and severity of ransomware claims.

Not only do ransom payments often exceed $US1 million ($1.3 million), there are also additional claims payments for business interruption or data exfiltration, Marsh said.

“Underwriting scrutiny increased significantly and many insurers narrowed coverage for ransomware-related losses for companies that failed to show certain levels of maturity,” the broker said.