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The Actuary The magazine of the Institute & Faculty of Actuaries

Commercial insurance prices rise 8%

Average commercial insurance pricing increased by 8% in the third quarter of 2019 globally, the biggest rise recorded by Marsh in seven years.

Insurance pricing rising worldwide ©iStock
Insurance pricing rising worldwide ©iStock

This marks the eighth consecutive quarter of average price increases, according to Marsh’s Global Insurance Market Index, which has been tracking prices since 2012.

Pricing for property risks increased by 10% in the third quarter, with financial and professional lines rising by nearly 14%, and casualty 1%.

It was also found that all regions experienced composite pricing increases for a fourth consecutive quarter, driven by rates in property and directors and officers (D&O) coverage.

“Global insurance pricing increased 8% in quarter three as the market continues to firm in most regions,” said Dean Klisura, president of global placement at Marsh.

“Pricing has now increased every quarter for nearly two years, and market capacity is starting to show signs of tightening in certain geographies and lines of business.”

The findings show that the Pacific region experience the largest composite pricing increase of 19%, a quarterly trend that has continued for almost three years.

This has also been driven by increases in D&O and property rates, while the UK, US and Asia all reported average pricing rises of 5% or higher in the latest quarter.

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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