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RESEARCH AND BRIEFINGS

Global Insurance Market Index - 2020 Q4

 


Global Commercial Insurance Pricing Up 22% in Fourth Quarter

Global commercial insurance pricing increased 22% in the fourth quarter of 2020, 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. The increase, the largest since the index was launched in 2012, follows year-on-year average increases of 20% in the third quarter and 19% in the second quarter.

Although the global index increased 22%, the index shows that price increases may be starting to plateau for some lines of insurance in certain geographies. For example, property insurance and directors and officers (D&O) insurance pricing in the US shows signs of moderating increases, and similar trends can be seen in certain property and casualty lines in Continental Europe and Latin America and Caribbean (LAC). Regionally, Continental Europe, Asia, and LAC have now experienced moderate levels of price increases for three quarters.

The average composite price increase in the fourth quarter was driven principally by property insurance rates and financial and professional lines. Among other findings, the survey noted:

  • Global property insurance pricing was up 20% on average, slightly down from the 21% increase experienced in the third quarter. However, global financial and professional lines were up 47% on average, up from a 40% increase the previous quarter. Casualty pricing was up 7% on average, compared to a 6% increase in the prior quarter.
  • Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.
  • All regions, except Latin America (9%), reported double-digit price increases, led by the UK (44%), Pacific (35%), US (17%) and Asia (11%). The rate of increase in the fourth quarter either declined or remained the same in all regions outside the UK and Pacific.

In Asia, average prices increased 11% in the quarter, slightly down from the 12% increase experienced in third quarter.

  • The property insurance pricing in Asia rose 16% on average, down from the 18% increase the previous quarter. Pricing differentials continued to exist between international and domestic insurers across North Asia, particularly in China and Korea. Clients with significant catastrophe (CAT) exposures and those requiring international capacity continued to experience double digit pricing increases.
  • Financial and professional lines pricing rose 22% on average, up from a 18% increase the previous quarter and the seventh consecutive quarter of increase. Financial institutions (FIs) experienced another quarter of pricing increases. Cyber insurance was more challenging as the underwriting process sought increased detail and as coverage was restricted in areas such as ransomware.
  • Singapore and Hong Kong also experienced large increases in D&O rates, driven by large multinational clients, particularly those with business activities impacted by the COVID pandemic.
  • Increases in D&O rates in Japan and Korea were not as high as in other parts of Asia due to local carriers in those countries not pushing rate increases to the same extent as global D&O insurers.

Constant bar chart represents Global Insurance Composite Pricing Change.