Directors’ and officers’ (D&O) pricing in the Australia-led Pacific market decreased 5% in the second quarter of this year, the first time that it has fallen since 2017, broker Marsh says in its latest quarterly update of commercial insurance premium pricing.

The decline confirms Marsh’s previous assessments that the “worst is over” for D&O after rates “levelled out” in the first quarter amid signs that insurers have started to compete for clients after significant price adjustments in recent years in response to deteriorating market conditions.

“Competition continued to develop, particularly for excess layers, resulting in improved pricing,” Marsh says in the Global Insurance Market Index update.

Overall pricing in the Pacific market – in which Australia makes up about 80% of the business for Marsh – went up 7% in the June quarter, slower than the 10% rise seen in the first quarter and is the sixth straight quarter of moderation in rate rises.

The property line – one of three commercial classes covered by the index – increased 5%, weaker than the 8% rise posted in the first quarter.

Marsh says insureds in catastrophe zones, especially areas exposed to flood risk, face increased underwriting focus, including on contingent business interruption, deductibles, and risk mitigation measures.

“A demonstrable commitment to continual risk improvement was critical to renewal success,” Marsh says. “Valuations have become a major underwriting focus for insurers due to global inflation.”

Casualty pricing surged 11%, after registering 15% increases in each of the three prior quarters, as insurers remained cautious due to claims inflation, Marsh says.

With available capacity reduced, programs often experienced placement challenges and risk selection has been more pronounced than in the past.

Financial and professional lines, including D&O, rose 6%, moderating from the 10% increase in the prior quarter.

While D&O rates have stabilised, cyber insurance remains challenging due to frequent and severe ransomware losses, Marsh says.

Commercial rates globally rose 9% in the second quarter, extending a trend of moderating rate increases that began in the first quarter of last year.

Property pricing increased 6% compared with 7% in the previous quarter and financial and professional lines went up 16%, weaker than the 26% seen in the prior quarter.

Marsh says cyber drove the increases in overall financial and professional lines pricing. In the US, cyber shot up 79% and in the UK 68%.

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