In an article on the Insurance News website according to global broker Marsh commercial premium increases in the Pacific region, where Australia is the largest market, rose by more than a fifth last quarter to once again outperform global peers.
The Marsh Global Insurance Market Index, which reflects renewal pricing, shows a 20.7% gain in the fourth quarter of 2019 in the Pacific region, continuing an upward trend started in 2015.
Financial and professional liability pricing rose by more than a quarter, driven by class action claims arising from the royal commission into financial services misconduct.
“The claims environment has led to a number of major insurers in the local market retreating, with others taking firmer positions on price, capacity, and retentions,” Marsh says, adding that a large volume of Australian business continues to be placed into the London market.
The largest price gains were experienced in listed company directors’ and officers’ (D&O), where increases of 100% or more were common. Financial services professional indemnity experienced similar hikes.
Pacific region property insurance pricing jumped 18% in the fourth quarter, the eighth consecutive quarter of year-over-year double-digit increases. Double-digit increases were reported for catastrophe and non-catastrophe risks in both Australia and New Zealand, and pricing was up 10-20% for many clients, with some cases even higher.
Casualty pricing rose 6% as, despite growing competition, pricing for all sub-products for both Australia and New Zealand was either stable or increased by single digits.
Globally, the average price increase rate for commercial insurance was 10.6%. That was the largest year-over-year increase since the index began in 2012 as the insurance market experienced price gains in many geographies and across multiple products.
All global regions have reported average pricing increases of 5% or higher for the first time since the index began. Prices in the US gained 10%, the UK rose 14%, Continental Europe 7%, Latin America and the Caribbean 7% and Asia 6%.
By segment, property insurance pricing increased 13% globally on average, casualty pricing increased 3% and financial and professional liability rose 18%.
“Pricing in the fourth quarter increased in all geographic regions for the fifth consecutive quarter, largely driven by rates in D&O coverage and property,” Marsh says.