Global Insurance Prices Increased 22 Percent in Fourth Quarter: Marsh Index

Global commercial insurance prices increased 22 percent during the fourth quarter of 2020, according to the Global Insurance Market Index from Marsh.

The increase was the largest since the index was launched in 2012 and followed year-on-year average increases of 20 percent in 2020's third quarter and 19 percent in the year's second quarter.

In a statement, Marsh noted that though the global index increased 22 percent, price increases may be starting to plateau for some insurance lines in certain regions. Property insurance and directors and officers (D&O) insurance pricing in the United States shows some signs of moderating increases, Marsh said, and similar trends can be seen in certain property and casualty lines in Continental Europe, Latin America, and the Caribbean.

Continental Europe, Asia, Latin America, and the Caribbean region have now experienced moderate price increases for three quarters, according to Marsh.

The average composite price increase in the fourth quarter was driven primarily by property insurance rates and financial and professional lines, Marsh said.

Among the Marsh survey's other findings are the following.

• Global property insurance pricing increased 20 percent on average, slightly down from the third quarter's 21 percent increase. But global financial and professional lines increased 47 percent on average, up from a 40 percent increase in the third quarter. Casualty pricing was up 7 percent on average, compared to a 6 percent increase in the third quarter.
• Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.
• All regions, except Latin America and the Caribbean (9 percent increase), reported double-digit price increases. The United Kingdom posted the largest increases at 44 percent, followed by the Pacific, 35 percent, and the United States, 17 percent. The rate of increase in the fourth quarter either declined or remained the same in all regions other than the United Kingdom and the Pacific.
• Public company D&O coverages continued to see large increases, especially in major markets such as the United Kingdom and Australia, Marsh said. While D&O prices may be moderating in some regions, prices are still up between 25 percent and 50 percent in many countries, the Marsh survey found.

"The global insurance marketplace was very challenging in 2020, and we expect these conditions to persist through the first half of 2021," Lucy Clarke, president of Marsh JLT Specialty and Marsh Global Placement, said in the statement. "Although we are seeing signs that price increases are beginning to plateau in some lines, our clients continue to face tough trading conditions."