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The Actuary The magazine of the Institute & Faculty of Actuaries

Global insurance prices rise again

Global commercial insurance prices increased more in the last quarter than in any other three-month period over the last seven years, new data from Marsh has revealed.

Prices rise but market capacity "remains stable" ©iStock
Prices rise but market capacity "remains stable" ©iStock

Marsh’s latest Global Insurance Market Index shows that average prices rose by nearly 6% in the second quarter of 2019, signifying the seventh consecutive quarter of growth.

It is the largest rise in prices recorded since 2012, with the UK, US and Asia all reporting average increases of at least 3%.

This comes after previous research from Marsh found that the first quarter of this year was also a significant three months for price rises.

“Although pricing has increased every quarter for nearly two years, market capacity remains stable in most products and geographies,” Marsh Global Placement president, Dean Klisura, said.

The data shows that average pricing for property risk insurance increased by 8% in the second quarter of 2019, while financial and professional lines rose by almost 10%.

In general, increases were more pronounced in large accounts, particularly in property and directors and officers liability (D&O).

Composite pricing rose in all regions for the third consecutive quarter, largely driven by rates in property and D&O coverage, with the Pacific reporting the largest increase.

Pacific composite pricing was driven by more expensive D&O rates, with many firms experiencing high double-digit increases, as well as rises in both CAT and non-CAT property.

This comes after research from finance company Premium Credit found that a growing number of UK businesses are ending their insurance coverage because they can’t afford it.

The findings show that 33% of small and medium-sized firms have cancelled a policy over the last three years because of price, with 50% of these happening in the last 12 months.

“It is shocking to see so many missing out on vital, sometimes legally necessary cover due to cost or concerns over payments,” Premium Credit director, Adam Morghem, said.

“This is leaving millions exposed to unnecessary risks and potentially even greater costs further down the line.”

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