Global commercial insurance pricing increased 22% in the fourth quarter of 2020, according to Marsh's quarterly Global Insurance Market Index, a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world's major insurance markets and comprising nearly 90% of Marsh's premium.
The increase in the reporting period, the largest since the index was launched in 2012, follows year-on-year average increases of 20% in the third quarter and 19% in the second quarter.
Although the global index increased 22%, the index shows that price increases may be starting to plateau for some lines of insurance in certain geographies.
For example, property insurance and directors and officers (D&O) insurance pricing in the US shows signs of moderating increases, and similar trends can be seen in certain property and casualty lines in Continental Europe and Latin America and Caribbean (LAC).
Regionally, Continental Europe, Asia, and LAC have now experienced moderate levels of price increases for three quarters.
The average composite price increase in the fourth quarter was driven principally by property insurance rates and financial and professional lines.
Among other findings, the survey noted:
Global property insurance pricing was up 20% on average, slightly down from the 21% increase experienced in the third quarter.
However, global financial and professional lines were up 47% on average, up from a 40% increase the previous quarter. Casualty pricing was up 7% on average, compared to a 6% increase in the prior quarter.
Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.
All regions, except Latin America (9%), reported double-digit price increases, led by the UK (44%), Pacific (35%), and the US (17%). The rate of increase in the fourth quarter either declined or remained the same in all regions outside the UK and Pacific.
Public company D&O coverages continued to see large increases, especially in major markets such as the UK and Australia. Although D&O price increases may be moderating in other regions, prices are still up between 25% and 50% in many countries.
Asia Pricing: Property, D&O Increase; Casualty Flat
Insurance pricing in the fourth quarter of 2020 in Asia increased 11% year-over-year
• Property pricing rose 16%, the ninth consecutive quarter of increase.
• Pricing differentials continued to exist between international and domestic insurers.
• The domestic marketplace across most countries insulated small to medium enterprise clients from the sharpest increases.
• Clients with large CAT exposures and those requiring international capacity continued to experience double-digit pricing increases.. Casualty pricing remained generally flat, as it has for three years.
• The benign claims environment helped to maintain insurer appetite and competition, and slowed pricing movements.
• Clients with US exposures faced a more challenging market, with upward pressure on pricing .
• Financial and professional lines pricing rose 22%, the largest increase observed in several years and the seventh consecutive quarter of increase.
• A reduction in capacity, particularly from global insurers, driven by poor global underwriting results, contributed to pricing increases.
• US-listed D&O was most affected by the increases, which ranged to 100% amid limited insurer appetite.
• Many clients elected for increased retentions to minimize premium increases.
• FIs experienced another quarter of pricing increases. For larger FIs in Asia, insurers pushed to increase retentions, which have historically been significantly lower than in rest of the world.
•Coverage restrictions were imposed on some clients.