The reinsurance sector has shown itself to be well versed at navigating market-changing events, and the overriding message following recent renewals is that the market remains well positioned to support insurers through the current period of uncertainty and volatility.
Global commercial insurance pricing increased for the eleventh consecutive quarter in the second quarter of 2020, according to Guy Carpenter-affiliate Marsh’s quarterly Global Insurance Market Index, a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world’s major insurance markets and comprising nearly 90 percent of Marsh’s premium. The increase, the largest since the index was launched in 2012, follows year-over-year average increases of 14 percent in the first quarter and 11 percent in the fourth quarter of 2019.
As with the first quarter, average price increases were driven principally by increases in property insurance rates and financial and professional lines.
- Global property insurance was up 19 percent and global financial and professional lines were up 37 percent, while global casualty pricing was up 7 percent on average.
- Composite pricing in the second quarter increased in all geographic regions for the seventh consecutive quarter.
- The United States (18 percent), United Kingdom (31 percent), Continental Europe (15 percent), and Pacific (31 percent) regions all had double-digit pricing increases. Pricing increases in these regions were largely driven by increases in property and directors and officers (D&O) coverages.
- U.S. public company D&O prices were up 59 percent on average, with more than 90 percent of clients experiencing an increase. In the United Kingdom, (D&O) pricing increases averaged over 100 percent. A similar situation exists in Australia, where a lack of competition has resulted in capacity shortage.
Guy Carpenter’s view is that the fundamentals of reinsurance remain strong: the sector’s capital base has been resilient to the recent financial market volatility and there are still opportunities in this environment for (strongly capitalized) carriers to offer new solutions and grow selectively into challenged lines.