Home / Daily / Latest Marsh index suggests 'turning point' in pricing
4 May 2021
Commercial rates in the Australia-led Pacific region and globally grew at a slower pace in the three months to March, according to Marsh, raising expectations that the market may have peaked after several quarters of record-breaking increases.
The broker says its latest Global Insurance Market Index shows Pacific insurance pricing rose 29% on average in the first quarter of the year, down from 35% in the prior three-month period.
“While rates are still increasing, we are hopeful that this marks a turning point in the longstanding upward trend we have seen over the last several years,” Marsh Head of Global Placement Asia Pacific John Donnelly said.
Globally rates went up 18%, weaker than the 22% surge seen in the December quarter, with all six geographic regions covered by the index seeing lower price increases.
The UK recorded the steepest increase of 35% during the first quarter, compared with 44% in the previous December quarter, followed by the Pacific region where Australia is the largest market.
US prices advanced 14% (versus 17% in December quarter), Continental Europe 13% (versus 14%), Asia 8% (versus 11%) and Latin America 5% (versus 9%).
“Although we will continue to see price increases in some lines and the market overall will remain challenging for our clients, we expect price increases to continue to moderate throughout the rest of the year,” Marsh Specialty and Global Placement President Lucy Clarke said today.
Financial and professional (Finpro) pricing surged 40%, the biggest out of the three product categories tracked by the index. Property grew 15% and casualty 6%.
While the increase in Finpro rates represents a moderation from the 47% spike in the December quarter, Marsh says cyber and directors’ and officers’ (D&O) remain under pressure because of the frequency and severity of losses.
The cyber situation is especially acute in the US and UK, with prices 35% and 29% higher respectively in the first quarter.
Finpro rates in the UK accelerated 71% due largely to D&O as some insurers say that increases in the first quarter of last year were inadequate, according to Marsh.
In the Pacific region, Finpro pricing rose 48%, property 20% and casualty 17%.
Marsh says the Finpro market remains challenging as all major lines - D&O, professional indemnity (PI), and financial institutions - experienced reduced insurer appetite.
“Major claims impacted the market, particularly regarding listed company D&O and construction/engineering PI,” Marsh said.
“Publicly listed D&O companies experienced significant premium increases. Reduced limits were common, with some signs of new capacity becoming available in the London market.”
Marsh says the 17% rise in casualty pricing is the largest year-on-year increase since 2012. It is also higher than the 15% rise recorded in the previous quarter.
Moves by insurers to deploy less capacity on major accounts, making it challenging to complete large programs, are keeping rates buoyant, the broker says.
Additionally several carriers withdrew from various industries and geographies and policy wordings continue to be scrutinised.
For the property line, insurers continued to focus on policy coverage issues such as weather sub-limits and contingent business interruption extensions.
Program limits and retentions were also heavily scrutinised by insurers, forcing buyers to continue to seek alternatives.
Click here to access the report.