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Insurance prices increased sharply in third quarter: Marsh

Marsh pricing

U.S. commercial insurance prices increased 18% in the third quarter, driven mainly by higher rates for property exposures and financial and professional lines, according to a report released by Marsh LLC Thursday.

Commercial property rates in the U.S. increased by 24% in the third quarter, which is the largest reported increase in eight years, Marsh said.

Some 85% of renewing clients saw an increase, and large clients with more than $1 million in premium experienced property price increases of 35% on average, versus 20% for smaller clients, Marsh said in its Global Insurance Market Index report.

Financial and professional liability insurance prices in the U.S. increased 28%, driven by directors and officers liability rate hikes of more than 50% for public companies, the report said.

More than 90% of Marsh’s U.S. public company D&O clients saw an increase and pricing rose even as many clients increased retentions and reduced limits.

Casualty pricing in the U.S. increased 8% in the third quarter with large and complex umbrella excess risks seeing increases in the range of 30% to 60% and sometimes higher, the report said.

Commercial auto insurance pricing increased 7% in the third quarter, while workers compensation pricing was down 3%.

Employment practices liability insurance average pricing was up 10% in the quarter, with increases tied to COVID-19 issues, and cyber pricing increased 11%, the largest increase since 2016, Marsh said. More than 15% of cyber clients increased limits.

Ongoing pricing challenges in the marketplace led many Marsh clients to adjust programs by increasing retentions, reducing limits, and/or modifying policy terms, according to the report.

Global commercial insurance prices increased 20% on average in the third quarter, compared with 19% in the second quarter and 14% in the first quarter. This was the largest increase since the index was launched in 2012, Marsh said.

Global property insurance pricing was up 21% while global financial and professional lines were up 40% on average, both greater than the increases reported in the second quarter, Marsh said.

Casualty pricing was up 6% on average, a slight decline from the 7% increase reported for the prior quarter.

All regions except Latin America reported double-digit pricing increases, led by the United Kingdom at 34%, Pacific at 33% and then the U.S. at 18%.

International public company directors and officers coverages continued to see large increases, with pricing in the U.K. and Australia up more than 100%, Marsh said.

“Based on current conditions, we expect the pricing environment to remain challenging in most regions and across most products, with the firming market extending through the first half of 2021,” Marsh said in the report.

More insurance and risk management news on the coronavirus crisis here.