Asia | November 5, 2024
According to the Global Insurance Market Index released today by Marsh, the world’s leading insurance broker and risk advisor and a business of Marsh McLennan (NYSE: MMC), global commercial insurance rates fell 1% in the third quarter of 2024, the first time the index has recorded a quarterly decline since the third quarter of 2017.
The result is a continuation of the moderating rate trend, which is largely being driven by increased competition among insurers in the global property market.
On average, rates decreased in Asia by 4%, the Pacific by 6%, in the UK by 5%, in Canada by 3%, and in the India, Middle East, and Africa region by 2%. Rates increased by 3% in the US and in the Latin America and the Caribbean (LAC) region and were flat in Europe.
Other findings included:
- Property insurance rates globally fell 2%, after being flat in Q2 2024 and experiencing a 3% increase in Q1 2024. Rates declined in the US, UK, Canada, Asia, Pacific, and IMEA, but increased in Europe, and LAC. Insureds with assets concentrated in catastrophe zones such as the Gulf of Mexico, the US Atlantic coast, or California, as well as those that had recently experienced higher than average rate increases, generally saw above average rate decreases. However, this was before the recent Gulf hurricanes.
- Asia property rates declined 3%. Insurers showed more flexibility around deductibles and coverage throughout the quarter while maintaining the underwriting discipline. In addition, insurers maintained their focus on exposure to natural catastrophes and clients showed increased interest in alternative risk transfer solutions, such as parametric insurance and captives.
- Casualty lines rates increased 6% globally, having risen by 3% in each of the previous seven quarters, largely driven by concerns around large jury awards in US courts.
- Asia casualty insurance rates declined 2%. Heightened disclosure requirements typically led to longer underwriting process and notably different terms for clients with North American exposure. Increased claims activity was observed for automotive liability and workers’ compensation, however rates remained stable on average.
- Financial and professional lines rates decreased by 7% globally — the ninth consecutive quarter of declines — with rate decreases recorded in every region.
- Financial and professional lines rates in Asia declined 10%. Continued lack of activity in the capital markets limited insurers' opportunities for new business, resulting in increased competition for renewal business. Directors and officers (D&O) liability rates continued to drive overall rate changes with financial and professional lines, with double-digit decreases observed in most markets across the region.
- Cyber insurance rates decreased 6% globally – the same rate of decrease as the previous two quarters – with decreases in every region. More non-cyber policies contained cyber exclusions, which led to increased focus on ways to address potential coverage gaps for property damage or bodily injury caused by a cyber event.
- Asia cyber insurance rates decreased 7%. The CrowdStrike outage raised concerns for some insurers; however, its impact on the market was limited due to a relatively short remediation process and the uptake rate of technology failure extensions related to network interruption coverage. Cyber insurance remained a key growth area for insurers in the region. Rate reductions, increased capacity, and insurer willingness to expand coverage have created a favourable environment for buyers.
Commenting on the report, Pat Donnelly, President, Marsh Specialty and Global Placement, Marsh, said: “In the third quarter, for the first time in seven years, we saw a decline in the global composite rate, with three of the four major product lines experiencing a decrease, which is a positive development for our clients. We are watching the markets closely for any impacts from the recent devastating storms during the North American hurricane season, and continue to offer support to our clients and the broader communities affected by them.”
