A report issued today by Marsh has revealed that global commercial insurance prices rose by 20% in Q3 2020, news which marks the twelfth consecutive quarter of price increases. According to Marsh's Global Insurance Market Index, the third-quarter rise in pricing is the largest year-on-year since the inception of the index in 2012 and follows year-on-year increases of 19% in Q2 and 14% in Q1.
It was found that the average composite price increase of 20% was mainly driven by property insurance rates and financial and professional lines. The survey found that global property insurance pricing is up 21% while global financial and professional lines are up 40% on average. Both increases are greater than those reported for Q2 2020. Meanwhile, casualty pricing is up 6% on average, a slight reduction from the 7% increase for the previous quarter.
Composite pricing in Q3 increased in all geographic regions for the eighth consecutive quarter with all regions, except in Latin America (9%), reporting double digital pricing increases. The UK led the way (34%) followed by Pacific (33%) and the US (18%), and in all regions pricing changes were equal to or greater than increases reported in Q2.
Public company directors and officers (D&O) coverage is an area which continues to see large increases with D&O pricing in the UK and Australia up more than 100%, while pricing in the US is up nearly 60%. It was revealed that over 90% of US public company D&O clients experienced an increase.
Discussing the findings of the index, Lucy Clarke, president, Marsh JLT Specialty and Marsh Global Placement, noted that challenging conditions continue to exist across many parts of the insurance marketplace. She highlighted that the impact of uncertainty, particularly related to COVID-19, and loss experience in many lines have contributed to this trend.
"For many clients these conditions are occurring at a time when they can least withstand them," Clarke said, "and are leading many companies to rethink their insurance buying patterns including increasing retentions, reducing limits, and modifying policy terms and conditions. As we expect these challenging conditions to persist into 2021, we are committed to ensuring we leave no stone unturned when it comes to the best outcomes for our clients in this market."