Commercial insurance pricing growth in the Australian market slowed in the second quarter, rising 2% after clocking a 7% increase in the first quarter, broker Marsh announced today. 

The second quarter price growth is the weakest since the fourth quarter last year when rates went up 5%. 

Globally rates grew 3% following a 4% rise in the January-March period, according to the Marsh Global Insurance Market Index. 

In the Australia-led Pacific market – which is dominated by Australian businesses – major lines tracked by the index showed signs of moderating rate increases including property except for cat-affected clients. 

Property went up after 5% after pricing grew 8% in the first quarter. However, loss impacted and cat- exposed clients are seeing the highest increases. 

“It was important that insureds’ declared values were supported by formal valuations and/or adequate inflation loadings,” Marsh said. 

“Cautious underwriting continued; however, there were signs of insurers seeking to grow business.”

Financial and professional lines declined 8%, the first contraction in more than 17 quarters as directors’ and officers’ (D&O) pricing continued to weaken and cyber rate growth decelerate in the face of increased competition for business. 

Marsh says D&O prices fell 10% or more, noting competition remained strong for both primary and excess layers from both new and legacy insurers. 

Cyber went up 8%, markedly slower than the 25% rise seen in the prior quarter. 

Marsh says increased competition among insurers opened up more options for clients and that risk information remained important to underwriters, particularly regarding an organisation’s ability to mitigate ransomware threats. 

Casualty pricing rose 7%, compared to 10% in the prior three quarters. Marsh says insurers focused on claims inflation resulting from litigation trends, as well as materials cost inflation. 

Marsh says the 3% rise in global pricing marked the 23rd consecutive quarter in which composite rates went up, continuing the longest run of increases since the inception of the index in 2012. Increases peaked at 22% in the fourth quarter of 2020. 

Property gained 10%, the highest of the three lines covered by the index. Casualty grew 3% and financial and professional fell 8%. 

“While the continued moderation in cyber and D&O insurance is a highly positive development for our clients, the continued increases in the property market, specifically property catastrophe, remain an area of concern for our clients, and of focus for us,” Marsh Specialty and Global Placement President Pat Donnelly said. 

“As we move through the second half of 2023, we are working with clients to explore a broad range of options that will help them navigate the challenges ahead amid ongoing economic, inflationary, and geopolitical uncertainty, and achieve optimal outcomes from the insurance market.”