Global commercial property rates up in Q1, led by U.S.
U.S. commercial property insurers continue to voice concern about undervaluation and inflation, according to Marsh.
Overall worldwide commercial property rates were up 10% during the first quarter of 2023, while a 17% increase was seen in the U.S., the biggest increase experienced in any region, according to Marsh’s Global Insurance Market Index. During the final quarter of 2022, the U.S. saw an average commercial property rate increase of 11%.
In comparison, U.K. and Pacific region commercial property rates increased 7% during the first quarter, while the rate in continental Europe increased 5% and Latin America saw an increase to 8%.
Across lines, U.S. commercial rates were up 4% in Q1 2023 compared with 3% in the prior period. Global composite rates increased 4%, the same rate as the previous quarter, according to Marsh, which noted it was the 22 consecutive quarter that saw pricing increases.
Commercial insureds with higher exposures to natural catastrophes (CAT), such as the Gulf of Mexico, Atlantic coast and California, and those with prior losses generally saw higher increases. Conversely, best-in-class risks with limited CAT exposure were met with stable capacity from incumbents and typically saw better results.
Marsh reported insurance companies are still showing concern about inflation and valuations. Total insured values increased 9% during Q1 2023.
Secondary perils are also a sharp focus for insurers, who have been limiting capacity or seeking increased deductibles by regions facing wildfires, inland flooding and severe convective storms. Additionally, capacity for named wind in the Southeast and earthquake in California were closely reviewed by underwriters.
While the property market is hardening further, financial lines saw rates drop by 9% during Q1, Marsh reported. Directors & officers particularly stood out, as pricing declined 13% during the period.
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