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Global insurance rate decreases moderated on average for the fourth consecutive quarter, down 3.1 percent (compared to the previous quarter’s decrease of 3.2 percent), according to Marsh’s . *

“The last quarter of 2016 marked the fifteenth consecutive quarter in which average rates declined, largely due to a market with an oversupply of capacity from traditional and alternative sources and a lack of significant catastrophe losses,” said Dean Klisura, Global Industry Specialties and Placement leader at Marsh, in a statement accompanying the index.

Other highlights of Marsh’s fourth quarter report include:

• The fourth quarter of 2016 marked an entire year and four consecutive quarters in which the average rate of decline for global rates moderated – the first since Marsh initiated the index in 2012.
• Global property rates declined on average by 4.2 percent in Q4, compared to a decrease of 3.9 percent in Q3.
• The rate of decline for global casualty rates moderated to 1.9 percent from the previous quarter when rates declined by 2.4 percent on average.
• Financial and professional lines decreased on average by 3.0 percent, a similar level to the prior quarter (2.9 percent).
• US composite insurance rates were down 3 percent in Q4, which is in line with the global rate. This was driven in large part by decreasing rates, on average , in property insurance.
• US cyber liability rates continued to increase for the sixth consecutive quarter, although the rate of increase moderated to 1.4 percent from 5.2 percent in Q3 2016.
• The number of U.S. clients purchasing cyber insurance increased 25 percent from 2015 to 2016 across all industries, “with the greatest overall take-up in healthcare, communications, media and technology.”
• UK composite insurance rate decreases, on average, were greater – at 4.8 percent – than the global rate of decline, driven by soft markets across all major commercial insurance lines.
• Continental Europe’s composite rate decreases, on average, were greater than the global rate of decline – at 4.2 percent – driven in large part by decreasing property insurance rates.
• Latin America’s casualty, financial and professional liability insurance rates increased, on average, during Q4, which contributed to composite rate decreases that were more moderate than any other region – at 0.5 percent. Increases in average casualty insurance rates “were largely due to a rise in auto insurance prices, specifically in Colombia and Mexico, where Marsh has a significant market share.”

* Marsh described its Global Insurance Market Index as a “proprietary benchmark of commercial insurance premium rate change at renewal, representing the world’s major insurance markets and comprising 90 percent of Marsh’s premium.”

Source: Marsh

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