Global Insurance Price Increases Continued To Slow in Second Quarter

A graph with several downward trends over a digital map of the world

August 03, 2022

A graph with several downward trends over a digital map of the world

Global insurance prices increased 9 percent during this year's second quarter, with the pace of rate increases slowing for the sixth consecutive quarter, according to the latest Marsh Global Insurance Market Index.

Still, the second quarter was the 19th consecutive quarter in which composite insurance pricing increased, Marsh says, continuing the longest run of increases since the index was created in 2012.

Global composite increases peaked at 22 percent in the fourth quarter of 2020, Marsh says.

Marsh says that a slower pace of increases in financial and professional lines pricing contributed to overall moderation of pricing across most regions of the world.

Prices for cyber insurance continued to increase significantly in the second quarter, although the pace of increase slowed, according to the report. Cyber-insurance price increases stood at 79 percent in the United States during the second quarter and 68 percent in the United Kingdom, compared to 110 percent and 102 percent, respectively, a quarter earlier, Marsh says.

Insurance prices in the United States increased 10 percent in the second quarter, compared to 12 percent during the year's first 3 months, Marsh reports.

In the United States, property insurance prices increased 6 percent in the second quarter, continuing a decline in increases seen the past several quarters, the report says. "Rate increases may accelerate in future quarters, driven by challenging conditions in the reinsurance market and reduced capacity," Marsh says, however.

Excess insurers looked to increase attachment points on US property business during the second quarter, putting pressure on buffer layers, according to Marsh. Meanwhile, insurance buyers with significant losses or exposures to secondary catastrophe perils typically saw above-average property insurance price increases.

"Insurers continued to focus on secondary [catastrophe] perils—including wildfire, convective storm, and pluvial flood," the Marsh report says. "The market deteriorated for insureds with heavy exposure to wildfire."

Marsh says property valuations have become a particular focal point for insurers, the result of concerns over inflation, supply chains, and labor shortages, as well as their loss experience in situations where adjusted loss amounts went well above reported values.

On the US casualty insurance front, prices increased 6 percent in the second quarter, Marsh says, though excluding workers compensation that increase stood at 10 percent. "Casualty continues to be driven by workers compensation, which has helped lower average overall casualty rate increases," the Marsh report says.

US excess liability prices increased 16 percent in the second quarter, up from 10 percent in the first quarter, though the increase was still lower than that in the second quarter of 2021, Marsh notes. Buyers showed limited interest in increasing limits, according to the report.

Insurers continued to watch US casualty loss trends as the impact of courts closed during the pandemic continues to subside, Marsh says. Insurers also have expressed concern over potential risks associated with "forever chemicals."

US financial and professional lines prices increased 21 percent during the second quarter, down from a first-quarter increase of 28 percent, Marsh says. "Excluding cyber, financial and professional lines pricing decreased in the low-single digits in the second quarter," the report says.

The 79 percent increase in US cyber-insurance pricing was down from 110 percent during the first quarter and 133 percent in December 2021, Marsh says. "Insurers have begun to calibrate underwriting and pricing strategies on an account-by-account basis rather than on a portfolio basis," Marsh says.

Marsh notes that several insurers recently entered the US cyber-insurance market, increasing competition.

"Insureds with strong cyber-security controls may experience a stabilizing of pricing if they have previously experienced significant rate adjustments," the Marsh report says. "Insureds lacking basic cyber hygiene can expect to see continued significant premium and retention increases, coverage restrictions, and/or overall insurability challenges."

Of the world's regions, the United Kingdom saw the steepest decline in composite insurance price increases, to 11 percent in the second quarter from 20 percent in the first quarter, according to Marsh.

UK property insurance prices increased 6 percent in the second quarter, down from a 9 percent increase during the first quarter, Marsh reports. Meanwhile, UK casualty prices increased 4 percent in the second quarter, up from 3 percent in the year's first quarter.

While UK cyber-insurance price increases declined to 68 percent during the second quarter, some buyers continued to see triple-digit price increases, Marsh said.

In Latin America and the Caribbean, composite insurance prices increased 5 percent in the second quarter, down from 6 percent in the first quarter, Marsh reports. But casualty prices in the region increased 4 percent during the quarter, the first average increase in casualty prices since the first quarter of 2020.

In Continental Europe, the overall rate of insurance price increases was 6 percent in the second quarter, consistent with the increase during the prior quarter, according to Marsh. Property insurance prices increased 6 percent, while casualty prices increased 7 percent, up from 6 percent in the first quarter. Cyber-insurance pricing increased 50 percent during the quarter in Continental Europe, down from an 80 percent increase in the prior quarter, the report says.

In the Pacific region, composite prices increased 7 percent in the second quarter, down from 10 percent during the first quarter, Marsh says. In Asia, composite insurance prices increased 3 percent in the second quarter, the same increase as during the year's first 3 months.

August 03, 2022