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Global Insurance Market Index

2021 Q1 Update

Australia-Pacific insurance markets: Prices increase in first quarter, but at slower pace

Overall insurance pricing in the first quarter of 2021 in the Pacific region increased 29%, continuing an upward insurance market trend that began in 2015. For the first time in 16 quarters, the overall increase in insurance pricing in the region was less than in the prior quarter, according to the latest Marsh Global Insurance Market Index.

The global trend was similar, as overall commercial insurance prices rose 18% in the quarter, the fourteenth consecutive quarter of global price increases. The Q1 global increase was lower than the 22% seen in Q4 of 2020.

In the below video, John Donnelly, Marsh’s Head of Global Placement Asia and Pacific, provides a snapshot on the Pacific region’s pricing movements and key drivers in Q1, and what we can expect for the rest of 2021.

All major coverage lines continue to increase in Pacific region

Geographically, the UK, with a composite pricing increase of 35%, and the Pacific region, with a 29% increase, drove the global composite rate. In the Pacific region:

Property insurance pricing increased 20% in the Pacific region, which was a lower level of increase compared to the prior four quarters.

  • Australian weather-related catastrophe losses were less severe this season than last, and most claims developed from householder and private motor insurance. 
  • Insurers continued to focus on policy coverage issues such as weather sub-limits and contingient business interruption (CBI) extensions. 
  • Program limits and retentions were heavily scrutinised by insurers, and buyers continued to seek alternatives. 
  • Insurers paid increased attention to insured's environmental, social, and corporate governance (ESG) record. 

Casualty insurance pricing rose 17%, the largest year-over-year increase since 2012. 

  • Insurers deployed less capacity on major accounts, making large programs challenging to compete. 
  • Several carriers have withdrawn from various industries and geographies.
  • Policy wordings continue to be scrutinised. 

Financial and professional lines pricing rose 48%, marking 15 consecutive quarters of double-digit increases.

  • The financial and professional market remained challenging. All major lines - D&O, professional indemnity (PI), and financial institutions - experienced reduced insurer appetite. 
  • Major claims dominated the market, particularly regarding listed company D&O and construction/engineering PI.
  • Publically listed D&O companies experienced significant premium increases. Reduced limits were common with some signs of new capacity becoming available in the London market. 

Constant bar chart represents Global Insurance Composite Pricing Change.

Global insurance pricing

Increases across all geographies moderated in the first quarter due to a generally slower rate of increase in property and financial and professional lines.

Cyber insurance pricing diverged from the trend, with prices increasing by 35% in the US and 29% in the UK, driven by the frequency and severity of losses.  

Regionally, composite pricing increases for the first quarter were as follows (see Figure 2 within the report): 

  • UK: 35%
  • Pacific: 29%
  • US: 14%
  • Continental Europe: 13%
  • Asia: 8%
  • Latin America and the Caribbean: 5%

Pricing in financial and professional lines again had the highest rate of increase across the major insurance product categories:

  • Property insurance: 15%
  • Casualty insurance: 6%
  • Financial and professional lines insurance: 40%

It is important to note that reported pricing changes are averages and that the data used to estimate the changes cover a wide range of clients in terms of size, industry, location, claims history, and other parameters. Many clients received pricing changes that deviated from the average, some higher and some lower.

LCPA: 21/090

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