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RESEARCH AND BRIEFINGS

Global Insurance Market Report - 2019 Q4

 


Global Commercial Insurance Pricing Up 11% in Fourth Quarter

Global commercial insurance pricing increased for the ninth consecutive quarter in the fourth quarter of 2019, according to Marsh's quarterly Global Insurance Market Index, 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.

  • Average commercial insurance pricing increased 11% in the fourth quarter of 2019, the largest increase since the survey began in 2012, and the ninth consecutive quarter of average price increases.
  • Globally, on average, pricing for property risks increased 13%; financial and professional lines rose nearly 18%; and casualty increased 3%. Property rates in Hong Kong and Macau have increased by approximately 14%, Employee Compensation (EC) by 10% and motor fleet by 15%.
  • Composite pricing in the fourth quarter increased in all geographic regions for the fifth consecutive quarter, largely driven by rates in directors and officers (D&O) coverage and property.
  • All global regions reported average pricing increases of 5% or higher for the first time since the index began.
  • The Pacific region had the largest composite pricing increase in the index (21%), a quarterly trend that has continued for three years. Pacific composite pricing was driven by increases in D&O rates, as well as increases in property.

Hong Kong and Macau have been impacted by Typhoons Hato and Mangkhut followed by the demonstrations and more recently the coronavirus. Whilst these events have mainly affected the property market both EC and motor (these three represent the largest components of the Hong Kong/Macau market by premium) have also been impacted by deteriorating loss trends. Increased reinsurance costs and the need to adequately cover the cost of capital have resulted in premium rate increases across the major classes of insurance.

Whilst recent announcements for combined loss ratios from the major insurers have improved from 2018 to 2019, the outlook of premium rates for the remainder of 2020 will continue to rise as insurers become both more risk selective and disciplined in maintaining technical pricing.

Clients with good loss records, more attractive occupancies, long term relationships with their insurance partners and above all a proactive approach to risk management will be less affected by these global and local premium rate increases.

Marsh will look to ensure that our clients are positioned as superior risks that not only receive better terms than their peers but are also prepared to consider alternative deductibles or coverage to counteract any premium rate increases.

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Constant bar chart represents Global Insurance Composite Pricing Change.