Commercial pricing in the Australia-dominated Pacific region surged 35% in the fourth quarter as an upward trend accelerated, the latest Marsh Global Insurance Market Index shows.
The increase compares with 33% in the September quarter and 31% in the second quarter of last year.
Property pricing rose 31% in the final three months of the year, similar to the prior quarter, as the Australian market suffered heavy catastrophe losses in 2020.
There continued to be a focus on coverage restrictions and wording to mitigate increases while clients reduced limits on large programs to minimise impacts.
Underwriters continued to concentrate on pandemic and cyber clauses, catastrophe limits and contingent business interruption exposures.
Pacific casualty pricing rose 15%, the largest year-over-year gain since 2012, according to the report, with bushfires, including power distribution, US-exposed organisations and those with more frequent claims records often experiencing the greatest increases.
“Claims increased due to systemic issues and specific COVID-19 impacts,” it says. “Social inflation is rising due to increased medical costs, plaintiff-friendly jury pools and third-party claims litigation financing, all of which put pressure on insurer performance.”
Financial and professional lines pricing rose 51%, marking 14 consecutive quarters of double-digit increase as the market deteriorated.
Major claims continued to have an impact, particularly around listed company directions’ and officers’ (D&O) cover and construction and engineering professional indemnity.
Listed D&O accounts experienced increases above 100% in many cases with reduced limits common.
Global commercial insurance prices rose 22% in the quarter, the largest year-on-year jump for the period since the index began in 2012, and marking the thirteenth consecutive period of increases.
In other regions, prices gained 44% in the UK, 17% in the US, 14% in Continental Europe, 11% in Asia and 9% in Latin America and the Caribbean.
“Pricing increases may be starting to plateau for certain insurance products in certain geographies, for example D&O and property in the US, due in part to new capacity entering the market,” Marsh says.
It appears price hikes are also slowing in Continental Europe, Asia and the Latin America and Caribbean regions.
Blog Submission: Peter Sellwood
PALTD InsureRight – Insurance & Risk Management
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