Broker Marsh says global average commercial insurance prices saw the biggest increase in eight years during the second quarter of the year.
Prices leapt on average 19% according to the broker’s Global Insurance Market Index. The increase, the largest since the index was launched in 2012, follows year-over-year average increases of 14% in the first quarter and 11% in the fourth quarter of 2019.
Dean Klisura, President, Global Placement and Advisory at Marsh, said: “While pricing movements this quarter were impacted by losses related to COVID-19, other large losses contributed to overall pricing pressures. As insurers continue to work through claims in property and D&O, and with the full cost of COVID-19 still developing, upward pressure on pricing is anticipated for the balance of 2020.”
As with the first quarter, average price increases were driven principally by increases in property insurance rates and financial and professional lines.
The key highlights in the latest index found global property insurance was up 19% and global financial and professional lines were up 37%, while global casualty pricing was up 7% on average.
Composite pricing in the second quarter increased in all geographic regions for the seventh consecutive quarter.
The impact was global with the US (18%), UK (31%), Continental Europe (15%), and Pacific (31%) regions all had double-digit pricing increases. Pricing increases in these regions were largely driven by increases in property and directors and officers (D&O) coverages.
Unsurprisingly certain D&O markets saw large increases. US public company D&O prices were up 59% on average, with more than 90% of clients experiencing an increase. In the UK, D&O pricing increases average over 100%. A similar situation exists in Australia, where a lack of competition has resulted in capacity shortage.