Moderation the watchword for cyber rate increases

Cyber rate increases have continued to moderate, according to the latest Global Insurance Market Index released by Marsh.

Globally, cyber insurance pricing continued to moderate, with average price increases of 11% compared to 28% in Q4 2022. This was particularly evident in the largest cyber insurance markets, with prices rising by 11% in the US and 10% in the UK, compared to 28% and 34%, respectively, in the prior quarter.

Overall, global commercial insurance prices increased 4% in the first quarter of 2023, the same rate as the fourth quarter of 2022, according to the index. Q1 marks the 22nd consecutive quarter of pricing increases.

Marsh said that pricing increases across most regions moved within a small range compared to the previous quarter as decreases in financial and professional lines, and continued moderation in the cyber market, were offset by increases in property rates.

In the UK, composite pricing increased by 3% (down from a 4% increase in Q4 of 2022), in Continental Europe by 5% (down from 6% in Q4), and in Asia by 1% (down from 2% in Q4). In the US, pricing increased by 4% (up from a 3% increase in Q4), in Pacific by 7% (up from 5% in Q4), and in Latin America and the Caribbean by 8% (up from 7% in Q4).

For the third consecutive quarter, overall pricing in financial and professional lines fell. Driven by further rate reductions in the US and UK, average pricing declined by 5% in Q1, compared to a 6% decrease in Q4.

The broker noted that concerns about the impact of inflation on asset values and claims costs continued to be a focus for insurers. For example, in the US total insured values at renewal increased by 9%, on average, in the quarter.

Commenting on the report, Lucy Clarke, president, Marsh Specialty and Global Placement, Marsh said: “We welcome the favourable trends for our clients in D&O and cyber, but continued loss activity in property lines, and an increase in the cost of reinsurance and capital, combined with scarcity in certain lines, means that clients continue to face challenging market conditions.”