According to Marsh’s most recent Global Insurance Market Index, commercial insurance premiums around the world will rise by 3% in the third quarter of 2023, continuing the upward trend seen in the second quarter. The price increase seen this quarter is the 24th straight quarter.
In the third quarter, there was little variation in pricing patterns from one region to another. Financial and professional lines saw the most rate decreases, while the cyber insurance market saw the smallest price drop compared to the second quarter. Property insurance premiums, however, rose significantly, especially in the United States, where home values increased by 14% on average.
In the United States, average price increases stayed at around 4%, the same as they had been for the two quarters prior. In contrast, prices in Latin America and the Caribbean rose by 10% (from 8% in Q2), in Europe by 4% (from 5% in Q2), in the Pacific by 1% (from 2% in Q2), and in Asia by the same amount (from Q2 levels).
However, in the United Kingdom, overall prices fell by 1% (opposite of the 1% gain seen in the second quarter). Separate results for Canada (where prices fell by 1% in Q3) and India, the Middle East, and Africa (where prices rose by 3% in Q3) were reported for the first time by the Global Insurance Market Index.
How did rates fare for different kinds of insurance?
The survey indicated that property insurance premiums around the world increased by an average of 7% in Q3 2023, slowing from the 10% growth seen in Q2 2023. On the other hand, casualty insurance saw a consistent growth of 3%, in line with the previous three quarters.
Average pricing in the financial and professional categories has fallen for five consecutive quarters. Average prices in this industry fell by 6% in the third quarter, after falling by 8% in the second quarter due to rate reductions and increased capacity.
In contrast to the 1% growth seen in the previous quarter, cyber insurance premiums worldwide fell by 2%. It’s the first time the quarterly average has gone down since the second half of 2018.
During renewal conversations, insurers voiced concerns about inflation’s potential effect on asset prices and claim costs in most regions.
Clients will appreciate any reduction in cyber prices after years of hikes; it’s a reward for all their efforts to make their systems more secure. But the property market, and property catastrophe in particular, remains difficult, and that’s why we’re focusing on it,” said Marsh Specialty and Global Placement president Pat Donnelly.