The United States was the only region in the Marsh Risk Management Global Insurance Index to demonstrate rate increases on renewal for the second quarter, according to Marsh’s August “Global Insurance Market Quarterly Briefing.”
Rate increases were most prevalent in professional and financial institution liability lines, which renewed on average flat to as much as 10 percent for the quarter. Those renewing directors and officers liability (D&O) experienced flat to 8-percent increases, and across all lines of business, rates rose 1.6 percent, according to the report.
“Despite rate increases in several lines of business in the United States, insurers are competing aggressively for profitable business, and the market continues to experience an influx of new capacity,” said Dean Klisura, Marsh’s U.S. risk practices and specialties leader. “All of this is resulting in generally favorable market conditions for most clients.”
Q2 rate changes in the United States:
• General Liability: 47 percent experienced increases, 10 percent no change and 43 percent decreases.
• Workers’ Compensation: 55 percent experienced increases, 13 percent no change and 32 percent decreases.
• Excess/Umbrella: 55 percent experienced increases, 28 percent no change and 17 percent decreases.
• Public D&O: 62 percent experienced increases, 6 percent no change and 32 percent decreases.
Other observations from the report:
• A majority of U.S. insureds experienced increases on renewal across most major insurance lines for Q2.
• The U.S. property insurance market is becoming more competitive, although rate increases hit select pockets of insureds.
• Rates for lead umbrellas and workers’ compensation, particularly guaranteed cost, increased; general liability rates were mostly unchanged.
• Merger objection litigation and continued enforcement activities by regulators contributed to rate pressures for directors and officers (D&O) liability insurance, but competition stabilized premium increases compared to the first quarter.
• Total insurable values in the United States increased by 3.1 percent in the second quarter.
Outside the United States, insurance rates fell between 1 and 3 percent. The Marsh Risk Management Global Insurance Index, which represents a composite, or weighted, average of global rate change activity over the preceding four quarters, as whole, also fell. It was the first decline in the six quarters since the index was created.
Marsh said the most significant decrease in composite renewal rates came from Latin America, at 3 percent. Other decreases in the composite rate on renewal include Asia-Pacific (2.4 percent), the UK (1.7 percent) and continental Europe (1.3 percent). Germany, Italy and the Netherlands reported generally stable market conditions compared to the first quarter; Turkey and United Arab Emirates reported rate increases. In Italy, liability rates increased on average 10 to 20 percent. In France and Spain, rates typically renewed flat to 10 percent.
“Increased competition among insurers, increased capacity and the absence of major catastrophe losses saw property insurance rates typically fall or remain stable across all regions in the quarter,” Marsh said.
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