Webcast: Global Insurance Markets 2018: Midyear Update

Conditions in global commercial insurance markets are more challenging than in previous years, with insurers being more discerning in their underwriting, according to panelists on Marsh’s The New Reality of Risk^® webcast.

Global insurance pricing increased 1.2% in the second quarter of 2018, marking three consecutive quarters of increases, according to the Marsh Global Insurance Market Index. Australia saw the highest increases, at 13%, while average prices inched up in the UK and Latin America. On the other hand, rates fell slightly in Continental Europe, a trend that has been seen for seven consecutive quarters, while Asian markets also saw decreases in property, casualty, and financial and professional lines.

“Insurers are being more diligent in their risk review process,” said Tom Davis, CEO of Bowring Marsh. “In many cases, they’re requiring additional information, and as a result taking more time to offer terms.” And while some carriers are delivering strong returns, there is pressure on the worst performing London syndicates to return to profitability or risk closure.

Globally, the property market has experienced a shift, with rates starting to increase in the third quarter of 2017 following 16 consecutive quarters of reductions. This trend has continued this year, accelerated by last year’s catastrophe losses. In the US, rates were up 3% in the second quarter.

While catastrophe losses have slowed this year, Duncan Ellis, leader of Marsh’s US Property Practice, urged businesses to be prepared. “Make sure you have well-tested business continuity and crisis management plans in place.”

The second quarter of 2018 saw a 1.4% drop in the global casualty market. Dan Aronson, Marsh’s US Casualty Practice leader, described it as a buyer’s market for “favorable” risks, with mature carriers trying to hold onto existing business while competing for new business with each other and new entrants. “Insurers are using data and asking questions to better understand specific risks and protect their capital from areas of concern.”

Pricing for financial and professional coverage went up by 3.3% globally for a third consecutive quarter of increases, with the size of the increase growing each quarter. Conditions in the US have been more favorable, with prices increasing by 0.9%.

Sarah Downey, D&O product leader in Marsh’s US FINPRO practice, said a shift in claims behavior, fueled mostly by record levels of litigation, is making for a more challenging environment. “D&O insurers are more conservatively interpreting and applying policy wording in ways that result in more restrictive coverage decisions.”

Although the severity of #MeToo claims is driving the conversation with insurers in the US, demand for employment practices liability insurance has been muted in most European countries. “Given the focus on sexual harassment and scrutiny of corporate cultures, insurance buyers should expect underwriters to take an extensive look at training, claims processes, and policies and procedures,” said Eleni Petros, employment practices liability insurance practice leader in Marsh’s UK FINPRO Practice.

When it comes to cyber insurance, the market has remained stable, with relatively flat rates over the past year. A 2.1% increase in the US in the second quarter was largely due to more expanded coverage purchased. “While pricing remains relatively stable, the market has seen insurers aggressively expand the coverage available through a cyber policy, particularly first party coverage,” said Bob Parisi, cyber product leader in Marsh’s US FINPRO Practice.

In view of the shifts, the panelists advised risk professionals to start the renewal process early, allowing more time to analyze offerings while working with insurance advisors to devise the best coverage for their specific risk profiles.

Listen to a replay of the webcast.