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.
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,