Insurance and reinsurance brokerage, Marsh, has reported that global commercial insurance prices increased by 20% in Q3 2020, the largest increase since the Global Insurance Market Index was launched back in 2012.
This average composite price rise of 20% follows year-on-year average increases of 19% in Q2 and 14% in Q1 2020, and was primarily driven by property insurance rates and financial professional lines.
According to the latest index, on average, global property insurance pricing spiked by 21% and global financial and professional lines increased by 40% – both greater than the rises reported for Q2 2020. Casualty pricing increased by an average of 6% in Q3, which represents a slight decline from the 7% reported for Q2 2020.
For the eighth quarter in a row, notes Marsh, composite pricing in Q3 2020 increased in all geographic regions. Furthermore, the only region to report single-digit pricing increases was Latin America, at 9%. Whereas double-digit pricing increases were led by the UK at 34%, followed by Pacific at 33%, and the U.S. at 18%. According to the broker, price changes in all regions were equal to, or greater than those reported for the second-quarter of the year.
The largest increases of the quarter occurred in public company directors and officers (D&O) coverage. In the UK and Australia, D&O pricing increased by over 100%, while in the U.S. pricing was up almost 60%. According to the survey, more than 90% of U.S. public company D&O clients experienced price rises in the period.
Lucy Clarke, President, Marsh JLT Specialty and Marsh Global Placement, commented: “Challenging conditions continue to exist across many parts of the insurance marketplace. Uncertainty, particularly related to COVID-19, and loss experience in many lines have both contributed to this three-year trend of increasing insurance costs.
“For many clients these conditions are occurring at a time when they can least withstand them, and are leading many companies to rethink their insurance buying patterns including increasing retentions, reducing limits, and modifying policy terms and conditions. As we expect these challenging conditions to persist into 2021, we are committed to ensuring we leave no stone unturned when it comes to the best outcomes for our clients in this market.”
For the first time in almost 20 years, the insurance market is hardening after a prolonged softened state. As many of the driving factors for change persist, it’s expected that this trend of rising commercial insurance prices will continue into 2021 and beyond.
