Global Insurance Market Index - 2020 Q4

Global Insurance Prices: 13 Consecutive Quarters of Increase

Global commercial insurance prices rose 22% in the fourth quarter of 2020, the thirteenth consecutive quarter of price increases (see Figure 1). The fourth quarter rise in pricing was the largest year-over-year increase in the Marsh Global Insurance Market Index since its inception in 2012.*

Geographically, the UK, with a composite pricing increase of 44%, and the Pacific region, with a 35% increase, drove the global composite rate. Average composite pricing increased in all regions for the ninth consecutive quarter.

Pricing increases may be starting to plateau for certain insurance products in certain geographies — for example, directors and officers (D&O) and property in the US — due in part to new capacity entering the market. Continental Europe, Asia, and Latin America and Caribbean (LAC) have now had moderate levels of pricing increase for three quarters, suggesting that price hikes are slowing in these regions.

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, as well as some top tips for companies who are approaching renewals in the current market.

Pacific

Overall insurance pricing in the fourth quarter of 2020 in the Pacific region increased 35%, continuing an upward trend that began in 2015.

Property

• Pricing increased 31%, similar to the prior quarter, as the Australian market suffered heavy catastrophe losses in 2020.
• There continued to be a focus on coverage restrictions and wording to mitigate pricing increases.
• Clients reduced limits on large-limit programs to minimise pricing impacts.
• Underwriters continued to concentrate on pandemic and cyber clauses, catastrophe (CAT) limits and contingent business interruption exposures.

Casualty

• Pricing rose 15%, the largest year-over-year increase since 2012.
• Bushfire, including power distribution; US-exposed organisations; and those with frequency claims records often experienced higher increases.
• Excess layer pricing increased at a higher percentage than did primary layers.
• Casualty claims increased due to systemic issues and specific COVID-19 impacts. Social inflation is rising due to increased medical costs, plaintiff friendly jury pools, and third-party claims litigation financing — all of which put pressure on insurer performance. 

Financial and professional lines

• Pricing rose 51%, marking 14 consecutive quarters of double-digit increases.
• The financial and professional lines market continued to deteriorate in the fourth quarter. All major lines —D&O, professional indemnity (PI), and FI — were affected by reduced insurer appetite.
• Major claims continued to dominate the market, particularly around listed company D&O and construction/engineering PI.
• Listed D&O accounts experienced increases above 100% in many cases, with reduced limits common.