Nearly all regions reported double-digit price increases, led by the UK (44%), Pacific (35%), and the US (17%)
Global commercial insurance prices increased 22% in the fourth quarter of 2020, according to the Global Insurance Market Index released today by Marsh. The increase is the largest since the index was launched in 2012 and follows year-on-year average increases of 20% in the third quarter and 19% in the second quarter of 2020.
Although the global index increased 22%, price increases may be starting to plateau for some lines of insurance in certain geographies. For example, property insurance and directors and officers (D&O) insurance pricing in the US shows signs of moderating increases, and similar trends can be seen in certain property and casualty lines in Continental Europe and Latin America and Caribbean (LAC).
Regionally, Continental Europe, Asia, and LAC have now experienced moderate levels of price increases for three quarters.
The average composite price increase in the fourth quarter was driven principally by property insurance rates and financial and professional lines. Among other findings, the survey noted:
- Global property insurance pricing was up 20% on average, slightly down from the 21% increase experienced in the third quarter. However, global financial and professional lines were up 47% on average, up from a 40% increase the previous quarter. Casualty pricing was up 7% on average, compared to a 6% increase in the prior quarter.
- Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.
- All regions, except LAC (9%), reported double-digit price increases, led by the UK (44%), Pacific (35%), and the US (17%). The rate of increase in the fourth quarter either declined or remained the same in all regions outside the UK and Pacific.
- Public company D&O coverages continued to see large increases, especially in major markets such as the UK and Australia. Although D&O price increases may be moderating in other regions, prices are still up between 25% and 50% in many countries.
Commenting on the report, Lucy Clarke, president, Marsh JLT Specialty and Marsh Global Placement, said: “The global insurance marketplace was very challenging in 2020, and we expect these conditions to persist through the first half of 2021. Although we are seeing signs that price increases are beginning to plateau in some lines, our clients continue to face tough trading conditions.”