Asia Pricing Q4 2021

Asia Insurance Market Pricing: 2021 Fourth Quarter Update

Global commercial insurance prices rose 13% in the fourth quarter of 2021, a decline from the 15% increase in the prior two quarters, according to the Marsh Global Insurance Market Index. In Asia, prices increased 4% year-over-year, continuing a moderation in the rate of increase that began in the third quarter of 2020. 

The index is a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world's major insurance markets and comprising nearly 90% of Marsh's premium. Global composite pricing increases peaked in the fourth quarter of 2020, at 22%. 

Increases were again seen across all geographies and most major product lines in the fourth quarter of 2021. Regionally, composite pricing increases for the fourth quarter were as follows: 

• Asia: 4% 
• US: 14%
• UK: 22%
• Continental Europe: 9%
• Latin America and the Caribbean: 4%
• Pacific: 13%

Among other findings, the survey noted:

• Global property insurance pricing was up 8% on average, down from the 9% increase in the third quarter 2021; casualty pricing was up 5% on average, down from 6% in the third quarter.
• Pricing in financial and professional lines had the highest rate of increase across the major insurance product categories, at 31%, compared to 32% in the third quarter.
• Cyber insurance pricing again bucked the moderation trend and rose significantly in the quarter — up 130% in the US and 92% in the UK — driven by the frequency and severity of ransomware claims. 

Asia Findings

Property insurance pricing across Asia rose 3%, down from 5% in the prior quarter. It was the thirteenth consecutive quarter of increase. 

• Local insurance markets remained competitive as they were generally insulated from global loss activity.  
• Insurer competition continued to increase, particularly for loss-free clients in low-hazard industries.
• The property insurance market remained challenging for clients in catastrophe (CAT) zones, high-hazard industries, and those with poor loss histories.

Casualty insurance pricing increased 2%, a slight uptick from 1% in the third quarter. Casualty pricing has remained relatively flat for three years.

•  Clients with large losses and high claims frequency typically had more difficult placements, including changes in terms, conditions, and deductibles.
• Capacity continued to be generally sufficient.  
• Multinational insurers restricted capacity on excess layers, particularly with product recall and products liability exposures.
• Global claims activity and insurers’ tightening of control around capacity deployment is likely to shape pricing in 2022.

Financial and professional lines pricing rose 17%, the same as in the third quarter. It was the eleventh consecutive quarter of increase.

• Insurers focused on risk selection, with directors and officers (D&O) liability coverage for large organizations driving a significant portion of pricing increases.
• Asia continued to be a fragmented marketplace, with pricing movements not aligned between clients and countries. 
• Cyber risk, driven by ransomware losses, remained the most challenging coverage area, with increased pressure on pricing,