Global Insurance Market Quarterly Briefing – August 2013

Insurance rates in Latin America, Asia-Pacific, the United Kingdom, and Continental Europe declined modestly in the second quarter of 2013; rates in the United States rose moderately.

Merger objection litigation and continued enforcement activities by regulators – translating into investigations involving both corporations and their executives – contributed to rate pressures for directors and officers liability insurance.

Insurance rates in regions such as Latin America, Asia-Pacific, the United Kingdom, and Continental Europe declined modestly in the second quarter of 2013, while rates in the United States rose moderately. The combined effect was a decline in the Marsh Risk Management Global Insurance Index for the first time since its inception six quarters ago. The index represents a composite, or weighted, average of global rate change activity over the preceding four quarters.

According to the report:

• The United States was the only region to show an increase in the composite rate on renewal, with a rise of 1.6% when viewed across all lines of business.
• Casualty insurance rates generally fell between 1% and 5% in the United Kingdom, Continental Europe, and Latin America, while increasing in the United States.
• In financial and professional lines, renewals in the United Kingdom and Continental Europe typically saw slight decreases, while renewals in the United States were typically up between 2% and 3%.
• Increased capacity and competition among insurers and low losses from catastrophes generally kept property premiums from rising in the second quarter.
• Merger objection claims and litigation in the United States remained an issue for D&O insurers as nearly every M&A deal these days triggers at least one lawsuit.