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Global insurance rates declined for the 14th consecutive quarter amid ongoing capacity availability in most lines of businesses, although the rate of decline in the property insurance market continues to moderate, according to the latest Marsh Global Insurance Market Index.
The global insurance composite renewal rate declined 3.2% in the third quarter of 2016, compared with a 4.8% fall in the same period of 2015, according to the index published by Marsh L.L.C., which benchmarks global commercial insurance rates and comprises of 90% of the New York-based brokerage’s premium.
Global property renewal rates declined 3.9% in the third quarter of 2016, compared with a 7.1% drop in the same period of 2015, as the rate of decline continues to moderate this year amid above-average catastrophe losses, according to Marsh.
Insured losses from Category 5 storm Hurricane Matthew are currently being estimated at between $1.5 billion to $5 billion for the United States and the Caribbean. About $27 billion of insured catastrophe losses occurred in the first six months of 2016, compared with $19 billion for the same period the year before, due to catastrophes such as the Fort McMurray wildfires in Canada, earthquakes in Ecuador and Japan and flooding in the United States and continental Europe, according to the report.
In the United States, renewal rates remained competitive across all major lines of business, with financial and professional liability lines experiencing the lowest rate of decline and property lines experiencing the greatest rate of decline, according to the report.
High demand for cyber coverage in the United States continued to drive a 5.2% increase in renewal rates for the coverage in the third quarter, but the rate of renewal has moderated steadily since its recent peak of 20% during the second quarter of 2015. The limits of liability offered for US cyber coverage increased from $12 million in the first quarter of 2016 to $22 million in the third quarter of 2016 and the takeup rates rose from 13% in 2013 to 19% in 2015, according to Marsh.
The United Kingdom’s insurance market remained competitive across all major coverage lines with flat renewal rates on average in the third quarter of 2016, according to the report.
“The U.K.’s decision to leave the European Union has yet to impact insurance pricing,” the company said, referring to the so-called Brexit in which U.K. citizens voted in July to withdraw from the European Union.
Reinsurance industry representatives have said that Hurricane Matthew will have a limited impact on sliding reinsurance rates, Bloomberg reported. "I expect a strong likelihood for resistance to further price cuts," Ludger Arnoldussen, a member of Germany-based Munich Reinsurance Co.'s management board, said. "Reinsurance capital is still very high and the claims bill from natural disasters is still below average," said Jan-Oliver Thofern, head of Aon Benfield Group Ltd., Aon P.L.C.'s global reinsurance intermediary and capital adviser, adding that "improvements in prices and conditions are a real possibility for primary insurers next year."