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Australian commercial insurance prices are still rising more than anywhere else in the world but global prices rose for the first time since 2013, according to a new report from Marsh.
The Marsh Global Insurance Market Index found that average commercial insurance pricing around the world rose by 0.8% in the first quarter of 2018, compared to a decrease of 1.9% in the third quarter of 2017. Australian pricing continued its rise with the highest composite price increase of any region pegged at 10.4%.
John Donnelly, head of placement, Asia and Pacific, at Marsh, said that global pricing rises could further impact on Australia.
“While losses are driving increases globally, they have still been lower than many experts anticipated due to the continuing excess supply of capital in the market,” Donnelly told Insurance Business.“But the diminished competition in the market will give local underwriters more confidence that premium increases can be achieved.”
In the Australian commercial market, increases were seen across all major product lines and have been attributed to “poor underwriting performance in recent years,” the Marsh report states. Financial and professional lines saw the biggest gains with increases of close to 16% on average while property prices rose by an average of 9.5% and casualty saw average increases of 6.4%.
Donnelly said that he believes the price increases experienced are sustainable in the medium term “until we see a significant improvement in insurers’ underwriting results for commercial business.”
“There is diminishing competition in the market and this is being felt most in high hazard industries,” Donnelly continued. “In the traditional alternate market of London, there is pressure to increase pricing on the back of substantial losses from Hurricanes Harvey, Irma and Maria, as well as other catastrophes.”
