Commercial insurance pricing in the Pacific region increased 7% in the first quarter, rising from a 5% gain in the December period as natural catastrophe risks boosted property, the Marsh Global Insurance Market Index shows.

Property insurance pricing increased 8% compared to gains of 4% in the previous two quarters with loss impacted and catastrophe-exposed clients seeing the highest increases.

Marsh Head of Global Placement Asia Pacific John Donnelly says inflation, reinsurance availability and cost and catastrophe risk were the key drivers of the first quarter property increase, but indicators broadly now suggest an overall moderating market.

The first quarter is the quietest by far for renewals in the region, while second quarter renewal discussions are underway for major clients. Australia makes up about 80% of Pacific business tracked by the index.

“I think the trend is back to more moderating,” Mr Donnelly told insuranceNEWS.com.au today. “We are far more confident about the rest of this year’s pricing than we were three months ago.”

Pacific casualty pricing increased 10% in the quarter, maintaining the same level of increase as in the prior two quarters, with insurers maintaining a focus on claims inflation due to litigation trends and material cost inflation.

Financial and professional lines remained flat overall. Directors’ and officers’ pricing continues to improve for buyers, with most renewals seeing reductions of 5-10%, and in some cases more, while the quarter again saw increased competition, particularly for excess layers.

Cyber pricing increased 25% in the March quarter compared to 28% in the prior period after prices began stabilising in the second half of last year following previous sharp premium gains.

“As Q2 is starting, we are seeing an even greater moderating of the increases in cyber,” Mr Donnelly said.

“Rates had got so high that new insurers came into the market place, or those that had reduced their capacity have gone back to the amount of capacity levels that they previously had, and we are seeing that trend continue.”

Mr Donnelly says for most of the major classes of insurance, capacity levels have held up, despite recent difficult reinsurance renewals that had created some nervousness in the market.

Globally, commercial insurance pricing rose 4% in the first quarter, the same as in the December period, and marking the 22nd consecutive quarter in which composite pricing rose.

Property insurance increased 10%, compared to 7% in the fourth quarter, while in the US property pricing increased 17% compared to 11% in the fourth quarter, with a focus on inflation and valuations and catastrophe exposure.

Secondary perils, such as wildfire, inland flooding and severe convective storms, continued to be a focal point in the US, with insurers limiting capacity or seeking increased deductibles.

Globally, casualty rose at a steady 3% pace in the period, financial and professional lines fell 5% and cyber cover increases moderated to 11% compared to 28% in the prior quarter, the data shows.

Regionally, Latin America and the Caribbean reported the highest overall gains with 8%, followed by the Pacific with 7%, Europe at 5%, the US at 4%, the UK at 3% and Asia with an average 1% increase.

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