Global Insurance Pricing Continues to Increase in First Quarter 2020

Global commercial insurance prices rose 14%, on average, in the first quarter of 2020, the largest increase observed in the Marsh Global Insurance Market Index since its inception in 2012, and the tenth consecutive quarter of increases.*

Pricing was trending higher in the first quarter prior to any meaningful impact from losses associated with the COVID-19 pandemic. We do expect, however, that COVID-19 will have an impact on pricing for the balance of 2020.

As renewals arise for your insurance program, it’s important to differentiate your risks, including by starting the renewal process early.

Increases seen across product lines

Pricing increases were seen across multiple products and all three major coverage areas — property, casualty, and financial and professional.

As was the case in the fourth quarter of 2019, the highest levels of increase were observed in financial and professional liability, which increased by 26%, while property insurance was up 15% globally. Casualty lines globally increased 5%. All regions have now demonstrated six consecutive quarters of composite pricing increases.

US insurance pricing up by more than 10%

US insurance pricing in the first quarter increased 14%, year-over-year.

• Property pricing in the US has now increased 10 consecutive quarters (following the significant catastrophe losses in 2017), and was up by 21% in the first quarter, the highest level recorded since Marsh’s survey began in 2012.
• Financial and professional liability insurance rates in the US increased 23%, driven by directors and officers (D&O) pricing, which increased an average of 44%.  Pricing influences included heightened litigation, with traditional securities lawsuits increasing in frequency and severity. Cyber insurance pricing increased 6%, the highest average increase since 2016.
• Casualty pricing in the US increased 5% in the first quarter, largely due to the excess liability market, where prices increased by 11%. Automobile liability increased 10%, with 80% of clients seeing increase. Workers’ compensation pricing declined 1% in the quarter.

UK insurance prices up over 20%

Overall insurance pricing in the first quarter of 2020 in the UK increased 21%, the tenth consecutive quarter of increases.

• Financial and professional liability insurance rates were a major driver of the overall increases, up by 46%. Companies with any form of US listing exposures posed the greatest challenge. Within the financial institutions sector, we saw D&O capacity reductions in certain classes and types of institution, resulting in pricing increases.
• Property pricing in the UK increased 10% in the quarter. Capacity continued to decline as insurers looked to reduce their exposures on any given risk, avoid challenging trades, and increase premium rates.
• Casualty pricing in the quarter increased 5%.

Insurance Pricing by Region

Other regional highlights in the first quarter included the following:

• Insurance pricing in Asia increased 6% year-over-year, with property and financial and professional liability insurance pricing both rising 8%.
• Continental Europe experienced an 8% increase in overall composite insurance pricing.
• Overall pricing increased 10% in Latin America.
• Insurance pricing increased 23% in the Pacific region, continuing an upward trend that began in 2015.

For a more detailed look at global insurance pricing, see Marsh’s Global Insurance Market Index.

*All references to pricing are averages, unless otherwise noted.