Global commercial insurance pricing increased in the first quarter of 2018, according to the Marsh Global Insurance Market Index.
This is the second consecutive quarter of increases, following four-and-a-half years of price decreases. This sustained rating pressure has been largely driven by property insurance pricing, which was impacted by large catastrophe losses in the third quarter of 2017. The index suggests price increases in financial and professional lines have also made an impact.
Despite significant catastrophe losses in Q3 of 2017 (three major hurricanes struck North America, plus wildfires in California and devastating earthquakes in Mexico), the property insurance market’s capacity remains abundant with a good mix of available traditional and alternative capital, according to Marsh president of global placement and specialties Dean M. Klisura. Overall, pricing for property
risks increased 2.7% on average in the Q1 of 2018, after increasing 3.2% in the prior quarter.
Property insurance rates do vary by geography in the Global Insurance Market Index. Average property prices in the US increased about 3% in the last two quarters. Those increases include both catastrophe and non-catastrophe risk properties.
“The impact of catastrophe losses last year continued to impact property insurance prices in the US and elsewhere,” commented Klisura. “However, overall market capacity remains strong with pricing decreases continuing in many regions for lines of business less affected by losses.”
But it’s not all bad news for the US. Property rate increases were accompanied by continued declines in casualty lines pricing. Healthy competition in the US casualty markets has resulted in downward pressure on workers’ compensation and general liability pricing. Another market that saw pricing decreases for the fourth time in the past five quarters was US cyber insurance, which saw a 1.7% rate decline.
Overall pricing for financial and professional lines remained flat for the US in Q1 but increased worldwide by about 1.8%. This was driven by hikes of 3% in the UK markets and 15% in the Australian markets, spurred on by deteriorating claims environments.
Other important findings of the report include: