Marsh: Global commercial insurance prices up 14% in Q1 2020
Rates increased for the tenth consecutive quarter despite the minimal impact of the COVID-19 pandemic.
For the tenth consecutive quarter, commercial insurance prices across regions rose an average of 14% in the first quarter, says Marsh’s Global Insurance Market Index for Q1 2020. The rate hike marks the largest year-over-year increase since Marsh began publishing the index eight years ago.
“Pricing was trending higher in the first quarter, prior to any meaningful impact from losses associated with COVID-19,” Dean Klisura, president, global placement and advisory services at Marsh, said in a statement. He also noted that the pandemic will likely affect the remaining quarters, with its impact reflected in the total balance for 2020.
U.S. insurance pricing
Nearly every commercial line in the U.S. experienced some level of rate increases in first-quarter 2020, according to the Marsh report.
“U.S property pricing has increased for ten consecutive quarters and is a reflection of years of underpricing, continued losses, and tightened capacity,” Christopher Lang, global placement leader, U.S. and Canada for Marsh, told PropertyCasualty360. “In the first quarter of 2020, we saw average price increases reach 21%, on average — the largest year-over-year increase since Marsh began its index in 2012.”
Regarding casualty lines, Lang said: “U.S. casualty pricing has increased for four consecutive quarters and rose 5%, on average, in the first quarter. The persistent increase is driven primarily by the excess liability market, where there have been significant losses.”
The directors & officers’ liability market, which has been plagued by heightened litigation and securities lawsuits, experienced a 44% rate increase with more than nine in ten clients seeing such price changes.
Notably, the only product line to not show rate increases in Q1 2020 was workers’ compensation, where prices decreased by 1%, says Marsh.
U.K. insurance pricing
Across the pond, the U.K. market also is seeing significant increases across insurance lines. Property pricing in the U.K. increased by 10% in Q1, while casualty lines increased 5% following several years of single-digit decreases.
The financial and professional liability sector in the U.K. is experiencing the same risk and claims environment as the U.S with dramatically reduced capacity since 2017. As such, rates rose an average of 46% in the first quarter, and in some cases, D&O clients saw price increases of 100%.
Additionally, Marsh says it has “witnessed a greater adoption of policy restrictions, such as insolvency exclusions, bribery and corruption exclusions, and more restricted discovery options across the [professional lines] market.”
Latin American insurance pricing
The overall average composite pricing in the Latin American and Caribbean markets has risen for ten consecutive quarters, says Marsh, with Q1 reporting a 6% increase.
Property pricing rose by 9% in the quarter, possibly fueled by appetite changes in 2019 following strikes, riots, and civil instability in certain areas of South America. Casualty rates increased 2% and continue “to be generally stable across the region, with relatively minor increases observed in the last several quarters,” says Marsh.
Increases in financial lines (8%) revolved around FI and professional liability, with double-digit rate hikes in Brazil, Colombia, and Mexico.
For more information about Q1 2020 insurance pricing trends, read Marsh’s report here.
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