Global commercial insurance prices rose 20 percent in the third quarter of 2020, the twelfth consecutive quarter of price increases, according to Marsh’s Global Insurance Market Index.
The Q3 rise in pricing was the largest year-over-year increase in the Marsh Global Insurance Market Index since its inception in 2012.
It was the eighth consecutive quarter of average composite pricing increases across all regions and the seventh consecutive quarter that saw pricing increases observed across each of the major product categories.
“The ongoing pricing challenges in the marketplace led many clients to adjust programmes by increasing retentions, reducing limits, and/or modifying policy terms,” Marsh said.
Pricing increased by the most in the UK, where composite insurance pricing increased by 34 percent, followed by the Pacific region, where prices rose by 33 percent. Prices in the US saw a more modest increase of 18 percent, higher than in Continental Europe, which saw price rises of 15 percent, and Asia, where prices rose by 12 percent. In Latin America and the Caribbean prices increased by only 9 percent.
In Q2 the UK and the Pacific region both saw increases of 31 percent. In the US prices rose by 18 percent in Q2, the same as in Q3.
By coverage type, financial and professional liability lines saw the greatest increases, coming in at 40 percent, having increased by 37 percent in Q2. This was well ahead of global property which saw increases of 21 percent in Q3, following a 19 percent increase in Q2. Global casualty lines only saw increases of 6 percent in Q3 and 7 percent in Q2.
In the UK specifically, financial and professional liability prices increased by 67 percent, driven largely by directors and officers (D&O) where public company pricing increased by more than 100 percent.
Price increases started in late 2017, noted Marsh, following a series of events, including catastrophe events in North America and Asia, that adversely affected insurer financial performance.
“Based on current conditions, we expect the pricing environment to remain challenging in most regions and across most products, with the firming market extending through the first half of 2021,” Marsh said.