Marsh: U.S. Clients in Q2 Pay More While Other Regions See Decreases

Marsh says second-quarter rates in the U.S. are up but small drops in rates outside the U.S., on average, declined.  

Across all lines of business during the last quarter, rates on renewals increased 1.6 percent in the U.S., with the largest hikes in professional liability and financial institution liability lines, which on average renewed at flat-10 percent.

During the first quarter in the U.S., most major insurance lines saw increases of between 2 percent and 4 percent, while rates decreased an average of about 1 percent outside the U.S., says Marsh in its Global Insurance Market Quarterly Briefing. 

D&O renewals renewed flat to up to 8 percent more during the second quarter. Marsh says merger-objection litigation and regulatory investigations—of corporations and executives—contributed to rate pressures for D&O liability insurance, but competition stabilized increases compared to the first quarter. About 62 percent of clients saw second-quarter D&O rate increases. Some D&O insurers have initiated separate M&A retentions in the $1-2 million range. 

Marsh says competition is increasing in the U.S. property insurance market, but property owners still paid more for insurance. Renewals for 52 percent of clients went up during the second quarter, down from 55 percent during the first quarter. “Insureds in the Northeast that had not yet renewed their property insurance programs since Superstorm Sandy faced greater scrutiny, particularly around deductibles and other coverage terms,” Marsh observes. 

“Despite rate increases in several lines of business in the U.S., insurers are competing aggressively for profitable business, and the market continues to experience an influx of new capacity,” says Dean Klisura, Marsh’s US Risk Practices and Specialties leader, in a statement. “All of this is resulting in generally favorable market conditions for most clients.” 

Outside the U.S., clients benefitted from a drop in rates of about 1-3 percent. Last quarter rates decreased an average of about 1 percent away from the U.S. 

Financial institutions in parts of the Eurozone saw liability rate increases during the second quarter, with rates up on average between 10-20 percent in Italy, for instance, says Marsh. Rates typically renewed flat to up 10% in France and Spain. 

Looking at international property rates, March says rates in countries that have experienced major losses in recent years have stabilized or are declining, but remain higher than before the large losses. In many regions new capacity has increased diversification and competition.