Global insurance rates continue downward trend: MarshReprints
Global insurance rates decreased for the 17th consecutive quarter in the second quarter of 2017, largely due to substantial capacity and a competitive underwriting market, Marsh L.L.C. said Tuesday.
However, the decreases are leveling off, according to Marsh’s Global Insurance Index, which found that global insurance rate decreases moderated on average for the sixth consecutive quarter, down 2.2%, compared with the previous quarter’s decrease of 2.3%.
Rate decreases moderated globally in the second quarter across property and financial and professional lines, the report said. Global property rates declined an average of 2.8% in the second quarter compared with a decrease of 3.6% in the first quarter, while financial and professional lines declined by 2.1%, compared to 2.6% in the previous quarter.
The decline in global casualty business was slightly higher at 1.7% in the second quarter than the first-quarter figure of 0.6%, largely driven by stronger declines in U.S. casualty pricing.
“The second quarter of 2017 marked the 17th consecutive quarter in which average rates declined,” Dean Klisura, global industry specialties and placement leader at Marsh, said in a statement, “largely due to a market with significant capacity and a competitive underwriting environment.”
The U.S. commercial insurance rate decline for the second quarter was higher than the overall global rate, Marsh said, a change from the first quarter, and was driven largely by casualty lines, which declined an average of 2.3% after having risen by 0.4% in the first quarter.
The change in casualty lines was largely due to an increase in the average rate of decline in workers compensation pricing and a smaller, continuing increase in average auto liability pricing. General liability renewal rates also declined in the second quarter after posting a slight increase in the previous quarter.
U.S. cyber insurance rates decreased an average of 1.5% in the second quarter, the first time since 2012 that average cyber rates declined for two consecutive quarters.
Marsh said one contributing factor to the rate movement is the increase in capacity due to the expansion of risk appetite from existing cyber markets and the entrance of new insurers into this area.
The United Kingdom second-quarter commercial insurance rate decreases remained, on average, greater than the global rate of decline. The average rate of decline for the U.K. was 4.2% in the quarter compared with 4.8% in the prior quarter. Renewal rates declined in the U.K. across all major product lines, although the average rate of decline moderated in casualty to 1.7% from 4.2%.
Continental Europe’s commercial insurance rate decreases, on average, were slightly above the global average rate of decline. A moderation in average property rates — from a decline of 5.3% in the first quarter to a decline of 1.9% in the second — helped bring the region’s composite average closer to the global rate.