Commercial premium increases in the Pacific region, where Australia is the largest market, rose by more than a fifth last quarter to once again outperform global peers.

The Marsh Global Insurance Market Index, which reflects renewal pricing, shows a 20.7% gain in the fourth quarter of 2019 in the Pacific region, continuing an upward trend started in 2015.

“Pricing in the fourth quarter increased in all geographic regions for the fifth consecutive quarter, largely driven by rates in D&O (directors’ and officers’) coverage and property,” Marsh says.

Property insurance pricing in the Pacific region jumped 18% in the fourth quarter. Double-digit increases have been reported for catastrophe and non-catastrophe risks in both Australia and New Zealand, and pricing has risen 10-20% for many clients, in some cases even higher.

"Increases were observed across many industries, including real estate, mining and downstream energy, as a result of reduced capacity and appetite from major insurers,” Marsh says.

Financial and professional liability pricing is up by more than a quarter, driven by class action claims arising from the Hayne royal commission.

“The claims environment has led to a number of major insurers in the local market retreating, with others taking firmer positions on price, capacity, and retentions,” Marsh says, adding that a large volume of Australian business continues to be placed into the London market.

The largest price gains in the last quarter were experienced in listed company D&O, where increases of 100% or more have been common. Financial services professional indemnity has experienced similar hikes.

Casualty pricing is up 6% as, despite growing competition, and pricing for all sub-products for both Australia and New Zealand is either stable or increased by single digits.

Globally, the average price increase rate for commercial insurance in the quarter was 10.6%. That was the largest year-over-year increase since the index began in 2012 as the insurance market experienced price gains in many geographies and across multiple products.

All global regions have reported average pricing increases of 5% or higher for the first time since the index began. Prices in the US gained 10%, the UK rose 14%, Continental Europe 7%, Latin America and the Caribbean 7% and Asia 6%.

By segment, property insurance pricing increased 13% globally on average, casualty pricing increased 3% and financial and professional liability rose 18%.

Data for the report is gathered from the world’s major insurance markets and comprises nearly 90% of Marsh premium.