Home / Local / Local premium gains outpace global markets: Marsh
12 August 2019
Premium price gains in the Pacific region, including Australia and New Zealand, tripled the pace of global increases in the second quarter, a Marsh report shows.
Pacific region pricing jumped 18.3% overall, after gaining 16.1% in the two previous quarters, while global pricing gains accelerated to 5.8% from a pace of 3% in the first three months of the year.
Concerns about class actions and the regulatory fallout from the Hayne royal commission continued to have a major impact in Australia, while property pricing remained strong.
“In addition to high hazard business, real estate, mining and downstream energy were more challenging in the quarter, with reduced capacity and appetite from major insurers,” the report says.
Property insurance pricing overall increased nearly 18% in the region, the sixth consecutive quarter of double-digit increases, while casualty rose almost 6%.
Prices for financial and professional indemnity made a major move up a year ago when the rate of increase rose from 15% to 23.3%, and the pace accelerated to nearly 28% in the latest period.
Class action risks for listed companies drove increases of 100% or more for some directors’ and officers’ cover, while financial services professional indemnity experienced increases of a similar magnitude, driven largely by claims arising from the royal commission.
“The claims environment has led a number of major insurers to retreat from the marketplace, with others taking much firmer positions on price, capacity and retentions,” Marsh says.
“Much Australian business is placed into the London market, where similarly challenging conditions were evident, resulting from the claims environment, and more broadly, the impact of the Lloyd’s syndicate review and the resultant contraction in capacity.”
The global gain in pricing was the largest increase since the survey began in 2012 and was boosted by an 8% increase for property risks and almost 10% gains in financial and professional lines.
The US gained 5%, the UK 6% and Asia 4%, while the laggards were Continental Europe with a 2% gain and Latin America and the Caribbean which edged up 1%.
The Marsh Global Insurance Market Index measures commercial pricing changes at renewal and covers nearly 90% of Marsh’s premiums.