The second quarter of 2017 marked six consecutive quarters of moderating renewal rate decreases, according to the latest Marsh Global Insurance Market Index.
It is also the seventeenth consecutive quarter in which commercial insurance rates declined, on average, largely due to the continuing forces of a global market with significant capacity and a competitive underwriting environment.
Global composite renewal rates have been on the decline since February 2013. As of February 2017, the global insurance composite rate change is -2.2%. Competitive global commercial insurance prices helped produce a combined ratio for the industry that was above 100% at the end of 2016 for the first time since 2012. U.S. cyber insurance rates decreased 1.5%, on average, in the second quarter of 2017, the first time since 2012 that average cyber rates declined for two consecutive quarters. One contributing factor to the rate movement for cyber is the increase in capacity due to the expansion of risk appetite from existing cyber markets and the entrance of new insurers into this product area.
The Marsh Global Insurance Market Index captures a rolling four-quarter view of rate movement, providing a quarter-to-quarter look at changes in the marketplace.
Rate decreases are steady throughout, with one exception
Insurance rates continued to decline globally, on average, in the second quarter of 2017 across property, casualty, and financial and professional lines. In global casualty lines, the rate of decline was higher in the second quarter than the first, largely driven by stronger declines in U.S. casualty pricing.
In Continental Europe, average property rates (-2.3%) are declining at the lowest rate since 2014.
The Pacific, however, is reporting average property rates (6.3%) increases, the first since 2013.
Commercial insurance market, by region
- The U.S. composite insurance rate decline was higher than the overall global rate in the second quarter of 2017. This represents a change from the first quarter and was driven largely by casualty lines, which declined 2.3%, on average, after having risen by 0.4% in the first quarter. The change in casualty lines was largely due to an increase in the average rate of decline in workers’ compensation pricing and a smaller, continuing increase in average auto liability pricing. General liability renewal rates also declined in the second quarter after posting a slight increase in the previous quarter.
- U.K. composite insurance rate decreases in the second quarter of 2017 remained, on average, greater than the global rate of decline. The average rate of decline for the U.K. was 4.2% in the quarter compared to 4.8% in the prior quarter. Renewal rates declined in the U.K. across all major product lines, although the average rate of decline moderated in casualty from 4.2% to 1.7%.
- Continental Europe’s composite insurance rate decreases in the second quarter of 2017, on average, were slightly above the global average rate of decline. A moderation in average property rates — from a decline of 5.3% in the first quarter to a decline of 1.9% in the second — helped bring the region’s composite average closer to the global rate.
- Composite insurance rate decreases in Latin America in the second quarter of 2017 were below the global composite average. Casualty insurance renewal rates increased, on average, by 6.1% in the second quarter, marking their fourth consecutive quarter of increases. Financial and professional liability coverage rates declined, on average, for the second consecutive quarter, but at a lower rate than in the prior quarter. Property renewal rates continued to decline, on average, though at a more moderate rate than in the previous quarter.
- Composite insurance rates for the Asia region in the second quarter of 2017 continued a decrease greater than the global rate of decline. Average property rates in the region decreased by 2.4%. Financial and professional liability rates fell, on average, by 3.4%. Average casualty rates continued to decrease at a moderating pace, declining by 5.2%, on average, in the quarter.