Insurance brokerage Marsh said Thursday that its Global Insurance Market Index, which measures global insurance premium pricing changes at renewal, showed a 20% year-over-year spike during the third quarter, an increase that it said is the index’s largest since it was established in 2012.
The insurance broker, which disclosed the increase in a new report, said the increase was the 12th straight one. Rate hike severity has seen a steady upward sequential trajectory that started with a 1% increase in the fourth quarter of 2017, Marsh’s data showed. The firm cited catastrophe events in both Asia and North America as being behind the initial push.
“Since then, the rate and breadth of pricing changes across geographies and products has increased,” Marsh said.
The firm, which is part of Marsh & McLennan Companies, also said that it anticipates rate pressure continuing through next year.
“Based on current conditions, we expect the pricing environment to remain challenging in most regions and across most products, with the firming market extending through the first half of 2021,” Marsh said.
Marsh’s data showed that the steepest regional third-quarter increases were in the U.K., at 34%, and in the Pacific, with average composite hikes of 34% and 33%, respectively. Marsh also said that the U.S. saw an 18% increase, while continental Europe saw a 15% hike. The firm observed the smallest increases in Asia, at 12%, and in Latin America and the Caribbean, at 9%.
The firm said that financial and professional liability experienced the steepest increase by coverage line, coming in at 40%, with property insurance following at 21%. In contrast, Marsh said that casualty insurance only rose by 6%.
Directors and officers insurance rates, which is part of the financial professional liability line, displayed especially significant hikes, Marsh said. For example, D&O pricing soared by more than 100% in the U.K., Marsh said, adding that more than 40% of its clients responded by making change to their coverage limits and retention.
Meanwhile, D&O pricing increased by more than 50% in the U.S., despite clients cutting limits and boosting retentions, Marsh said. The company added that more than 90% its clients have been dealing with hikes.
Multiple big clients reported D&O hikes above 50% in Latin America, the firm said, citing Chile, Colombia and Brazil in particular. Additionally, Marsh said that D&O pricing in the Pacific region surged past 100% “in many cases” and added that public companies cut their limits in response.
European clients also experienced D&O hikes, the firm said, noting that they were “for major programs in distressed sectors or with U.S. exposure.”
Additionally, Marsh said that the U.S.-listed D&O jumped significantly in Asia, citing some cases of 100% hikes.
Marsh also reported sharp increases in cyber insurance rates in the U.S. and U.K., including a new record of 11% in the former, and a 17% hike in the latter due to severity and volume of claims. However, the firm said that some U.S. clients increased coverage limits, with more than 15% in the. Marsh also reported that in the U.K., “about 30% of clients raised coverage and/or limits.”