Property drives weak pricing increase

Global commercial insurance prices rose, on average, for the third consecutive quarter, according to Marsh’s Global Insurance Market Index report, but with mixed results when looked at separately. The general increase in prices was largely driven by insurance pricing for property lines, which continued to be affected by 2017 catastrophe losses, and by increases in financial and professional lines, the report said. Overall, though, there was little change and the market remained stable. Second quarter price changes were within a relatively narrow range across most product lines and geographies. Globally, property insurance pricing increased 2.3%, on average. Financial and professional lines pricing increased 3.3% on average in the quarter, driven by increases in several regions, most notably Australia. Casualty pricing declined, on average, by 1.4%. Prices trended up in most regions with Australia averaging the largest increase, while prices decreased slightly in continental Europe and Asia. There was little good news from Asia, in general. Although, the pricing drop in the region was at a slower rate than observed in the last three years, average property insurance rates decreased for the second straight quarter, which was driven by non-catastrophe risks. One cause for optimism though, was that even as casualty pricing decreased in the quarter, it was at a rate much less than what has been reported since early 2014. Insurance prices in the US were flat in the second quarter of 2018, following three-plus years of composite decreases. Cat-exposed risks and large layered programmes drove much of this property increase with more than 50% of property clients experienced a price increase in the second quarter. Insurance pricing in Latin America for the second quarter moderated to below the global average, but still had positive growth. Financial and professional liability rates saw an acceleration of increase driven largely by D&O losses. “The global property insurance market continues to be impacted by last year’s losses, and we are now seeing increases in financial and professional lines pricing in several regions,” said Dean Klisura, president of global placement and specialties at Marsh, commenting on the findings, who believed the results showed reasons to be positive with a gradual upwards drift. “However, overall pricing is generally stable across all lines of business and market capacity remains strong.”

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