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Global insurance rates moderated for four consecutive quarters last year, Marsh L.L.C. said Wednesday, the first time this has happened since the broker started compiling the index in 2012.
Rate decreases moderated on average for the fourth consecutive quarter, down 3.1%, compared with the previous quarter’s decrease of 3.2%.
“The last quarter of 2016 marked the 15th consecutive quarter in which average rates declined,” Dean Klisura, New York-based global industry specialties and placement leader at Marsh, said in a statement, “largely due to a market with an oversupply of capacity from traditional and alternative sources and a lack of significant catastrophe losses.”
Marsh said that early indications that capacity may be moderating and that combined ratios may be increasing could be a portent of looming rate increases as carriers seek to boost profitability and keep combined ratios below 100%.
Insurance rates continued to decline, on average, Marsh said, across all major global insurance lines, driven largely by decreases in property insurance pricing.
Insurance rates were generally competitive worldwide throughout 2016, with U.S. composite rates down 3%. U.S. property rates were down 4.8%, casualty rates were off 2.1%, and financial and professional liability insurance rates were down 2.5%.
U.S. cyber liability rates continue to increase, reaching 1.4%, Marsh said, although the rate of increase moderated, on average, for the sixth consecutive quarter.
Despite this, Marsh said the number of clients purchasing cyber insurance increased 25% from 2015 to 2016 across all industries, with the greatest overall takeup in health care, communications, media and technology.
The United Kingdom’s composite insurance rates decreased 4.8% in the fourth quarter, exceeding the global rate. U.K. property rates were down 5%, casualty rates were off 4.2%, and financial and professional liability insurance rates were down 5%.
Continental Europe's composite insurance rate decreases reached 4.2%, greater than the global rate of decline. European property rates were down 5.6%, casualty rates were 3.2%, and financial and professional liability insurance rates were down 2.9%.
Latin America’s composite rate decreases moderated considerably in the fourth quarter, Marsh said, slipping 0.5%. Latin America property rates were down 4.2%, casualty rates were up 6.6%, and financial and professional liability insurance rates were up 2.1%.
The trend in Latin America was due largely to increasing casualty insurance rates driven by a rise in auto insurance prices, specifically in Colombia and Mexico.
The Asia composite rate was down 2.7%, while property rates were off 1.2%, casualty rates were down 5.8%, and financial and professional liability insurance rates were down 3%.
Fourth-quarter composite insurance rates in the Pacific region decreased 2.2% on average, although more moderately more than the global rate of decline.
The region’s financial and professional liability insurance rates increased by 1.7%, Marsh said, while casualty rates rose 0.4% on average. However, Marsh said, the average property insurance rate decline of 5% offset rate increases in other lines.
Reinsurance rates fell again at January 1, 2017, renewals, despite a 50% increase in catastrophe losses last year, as capacity remains plentiful in most markets, according to a report released Tuesday by Willis Re.