Major broker Marsh sees no let-up in the tough market conditions in Australia that have led to a record 31% jump in commercial rates in its Pacific region during the second quarter.

Recent natural catastrophes such as last summer’s bushfires and growing class action claims have been key drivers behind the steep rise in rates for business renewals in the region, which is dominated by Australia.

“The Pacific insurance market continued to deteriorate in the second quarter across most classes of insurance,” Marsh Placement Leader for Corporate & Commercial Australia Scott Eccleston told insuranceNEWS.com.au.

“Policy wordings are being heavily scrutinised and negotiated. Insureds’ retentions are being traded to offset premium increases, and often insurer line sizes and general capacity deployed is being wound back.

“We expect similar market conditions globally for the remainder of the year, and will be keeping a close eye on the potential development of COVID claims.”

Marsh’s latest report says prices globally rose 19% in the June quarter from a year earlier, the largest increase since it launched the Global Insurance Market Index in 2012 to track renewal rates.

By regions, overall rates in the UK and the Pacific recorded the highest increase of 31% during the period. In the US, prices gained 18% and in Asia it increased 9%.

In the Pacific region, financial and professional liability led the way with a record 48% rise in prices, as insurers continued to withdraw from the directors’ and officers’ (D&O) market over heightened fears of more class action claims in the future.

Many listed companies experienced increases of over 100%, despite accepting increased retentions and reduced limits in their D&O programs.

In the other two business lines, property pricing rose 28% and casualty pricing 9% during the June quarter.