What drove the variations in growth rates across market sub-segments?
According to Marsh’s most recent Global Insurance Market Index, commercial insurance premiums around the world will rise by 3% in the third quarter of 2023, continuing the upward trend seen in the second quarter. In addition, this quarter’s price growth is the 24th in a row.
In the third quarter, there was little variation in pricing patterns from one region to another. Financial and professional lines saw the most rate decreases, while the cyber insurance market saw the smallest price drop compared to the second quarter. However, these were more than offset by sharp increases in property insurance, which were particularly noticeable in the United States, where property values increased by 14% on average.
In the US, overall pricing elevation maintained a constant 4% increase on average, consistent with the two preceding quarters. In contrast, prices in Latin America and the Caribbean rose by 10% (from 8% in Q2), in Europe by 4% (from 5% in Q2), in the Pacific by 1% (from 2% in Q2), and in Asia by the same amount (from Q2 levels).
However, in the United Kingdom, overall prices fell by 1% (opposite of the 1% gain seen in the second quarter). For the first time, the Global Insurance Market Index broke down quarterly pricing changes by region, finding a 1% drop in Canada but a 3% increase in India, the Middle East, and Africa.
How did rates fare for different kinds of insurance?
The survey indicated that property insurance premiums around the world increased by an average of 7% in Q3 2023, slowing from the 10% growth seen in Q2 2023. However, casualty insurance showed a consistent growth of 3%, in line with the previous three quarters.
Average pricing in the financial and professional categories has fallen for five consecutive quarters. As a result of rate cuts and increased capacity, average pricing in this industry fell by 6% in the third quarter, compared to a drop of 8% in the second quarter.
In contrast to the 1% growth seen in the previous quarter, cyber insurance premiums worldwide fell by 2%. It’s the first time the quarterly average has gone down since the second half of 2018.
During renewal conversations, insurers voiced concerns about inflation’s potential effect on asset prices and claim costs in most regions.
To paraphrase, “after years of hikes, even a minor reduction in cyber charges will be appreciated by clients, and in large part, it is recognition of the hard work they have done to improve their cyber resilience. However, the property market—and property disasters in particular—remain problematic and are an area of focus of our work with customers’, Marsh Specialty and Global Placement president Pat Donnelly said.
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