Asia regional composite pricing rose the slowest - hitting only 6% in the fourth quarter of 2019, compared to a 21% rise in the Pacific region.
Property insurance pricing in Australia and New Zealand increased 18% in the fourth quarter, the eighth consecutive quarter of year-over-year double-digit increases.
Double-digit increases were reported for CAT and non-CAT risks, in both Australia and New Zealand. Pricing was up 10% to 20% for many clients; in some cases even higher. Similar to prior quarters, increases were observed across many industries, (including real estate, mining, and downstream energy), as a result of reduced capacity and appetite from major insurers.
Global commercial insurance pricing increased for the ninth consecutive quarter in the fourth quarter of 2019, according to Marsh’s quarterly Global Insurance Market Index, a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world’s major insurance markets and comprising nearly 90% of Marsh’s premium.
- Average commercial insurance pricing increased 11% in the fourth quarter of 2019, the largest increase since the survey began in 2012, and the ninth consecutive quarter of average price increases.
- Globally, on average, pricing for property risks increased 13%; financial and professional lines rose nearly 18%; and casualty increased 3%.
- Composite pricing in the fourth quarter increased in all geographic regions for the fifth consecutive quarter, largely driven by rates in directors and officers (D&O) coverage and property.
- All global regions reported average pricing increases of 5% or higher for the first time since the index began.
- The Pacific region had the largest composite pricing increase in the index (21%), a quarterly trend that has continued for three years. Pacific composite pricing was driven by increases in D&O rates, as well as increases in property.
Other pricing increases in the Pacific
Casualty pricing rose 6%, a trend of mid-single digit increases that has continued for three years. • Competition in the casualty market increased, but pricing continued to rise at a fairly consistent rate.
Pricing for all sub-products for both Australia and New Zealand was either stable or increased in the low-to-high single digits. Financial and professional liability pricing again rose more than 25% in the quarter, marking 10 straight quarters of double-digit increases.
D&O hits new high
The largest increases are being experienced on side C exposed listed company D&O, where increases of 100% or more have become common. Financial services professional indemnity (PI) has experienced increases of a similar magnitude.
In the D&O market, the driver for price change continues to be securities class action claims. Financial services PI pricing continues to be impacted by claims arising from the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Hayne report). The claims environment has led to a number of major insurers in the local market retreating, with others taking firmer positions on price, capacity, and retentions. A large volume of Australian business continues to be placed into the London market.