The fourth quarter of 2020 saw the largest quarterly rise in global commercial insurance prices since the launch of Marsh’s Global Insurance Market Index in 2012.
Prices increased 22 percent in Q4 2020, Marsh said, following year-on-year average increases of 20 percent in Q3 and 19 percent in Q2. Increases were led by global financial and professional lines, up 47 percent on average, up from a 40 percent increase in Q3.
Global property insurance pricing was up 20 percent on average, slightly down from the 21 percent increase experienced in Q3, Marsh said. Casualty pricing was up 7 percent on average, compared to 6 percent in Q3.
Composite pricing in Q4 increased in all geographic regions for the ninth consecutive quarter, Marsh noted, though closer examination of the index does offer some evidence that price increases may be starting to plateau for some lines of insurance in some regions.
Price increases in property insurance and directors and officers (D&O) in the US showed signs of moderating, as did some property and casualty lines in Continental Europe and Latin America and Caribbean (LAC).
Public company D&O coverages continued to see large increases, especially in major markets such as the UK and Australia, with most countries seeing price increases of between 25 percent and 50 percent.
Continental Europe, Asia, and LAC have now experienced moderate levels of price increases for three quarters, Marsh added.
The UK saw the steepest price increases of 44 percent, ahead of the Pacific (35 percent), and the US (17 percent). However, the rate of increase in Q4 either declined or remained the same in all regions outside the UK and Pacific.
Lucy Clarke, president of Marsh JLT Specialty and Marsh Global Placement, predicted the challenging market conditions will persist through the first half of 2021.
“Although we are seeing signs that price increases are beginning to plateau in some lines, our clients continue to face tough trading conditions,” she said. “We are committed to presenting all risk mitigation and insurance placement options to our clients and to offer advice and support as they consider adjusting their insurance buying patterns.”
Marsh, Global Insurance Market Index, Lucy Clarke