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Berkshire Hathaway Specialty Insurance
Berkshire Hathaway Specialty Insurance

Australia’s premium growth leads the world

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Commercial premium in the Pacific, along with the region’s largest market Australia, grew at the fastest pace in the world during the first quarter, Marsh says.

And it warns that with capacity shrinking and risk appetites decreasing, there are no signs yet to suggest the rate of increases is about to moderate.

Pacific region pricing went up 16.1%, similar to the fourth quarter but the increment is significantly higher than the average 3% gain recorded globally and in other regions, according to the Marsh Global Insurance Market Index.

Premium rates have been increasing in the past two years, and the past few quarters have seen Pacific insurers posting some of the biggest rises as capacity shrinks and risk appetites decrease.

“The increases in the property, casualty and financial lines markets were steady in the first quarter, albeit they are the highest of any region in the world,” Marsh Global Placement Leader Asia Pacific John Donnelly told today.

“We are seeing a reduction in capacity in all these lines as we move through the second quarter, which is having a greater impact on pricing.

“Several major global insurers have continued with poor underwriting results and consequently are under increased pressure from their global managements to push prices higher and reduce exposure.”

Property pricing in the Pacific grew by over 14%, the fifth straight quarter of double-digit growth.

The financial and professional liability market remains affected by the surge in class action claims last year, with prices up another 25.8%. Insurers are raising rates and deductibles for directors’ and officers’ covers taken up by listed companies, Marsh says.

In the casualty marketplace, prices went up 5.7% despite increased competition.

Globally casualty was the only line to decline, with prices down 0.7%. Property went up 4.7% and financial and professional liability line 5.6%.

“Overall, the market [globally] remained stable, with prices fluctuating within a relatively narrow range on average across most products and geographies,” Marsh says, adding the 3% gain in commercial premium was “again largely driven by property and directors’ and officers’ lines of coverage.”

In the US, pricing went up 1.1%, its best showing since 2013, while the UK posted its sixth straight quarter of rate gains, pushing the index up 2.9%.

Continental Europe and Asia posted gains for the second straight quarter with prices up 2% and 0.4% respectively.