Canadian Underwriter

Global insurance pricing declines in last quarter of 2013

February 7, 2014   by Canadian Underwriter

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Average pricing declines across the world, except in the United States, drove global insurance rates down at the end of last year, according to Marsh’s latest Global Insurance Market Quarterly Briefing.

In the fourth quarter of 2013, rates tracked by the company’s risk management global insurance index fell in the United Kingdom, continental Europe, and significantly in the Asia-Pacific and Latin America regions. The U.S., on the other hand, showed a rise in overall rates, according to Marsh.

There were lower rates for global property programs renewing in the last quarter, but by a smaller magnitude than in Q3, the briefing notes.

In Latin America, rate reductions on renewal typically were around 10%, driven by competition and available capacity, while in Asia-Pacific, property rate declines averaged 5%.

Casualty insurance also typically renewed at a slight decrease across the globe, led by falling rates in Asia-Pacific, continental Europe and Latin America, according to Marsh. Rates also fell for financial and professional liability in Asia-Pacific, the United Kingdom and continental Europe.

“Strong capital positions, plentiful capacity, and ample competition within the global insurance industry are leading to favorable conditions for clients, especially those with well-managed risks,” David Batchelor, president of Marsh’s international division commented in a press release.

“In the U.S., insurers are competing aggressively for profitable business and new entrants are helping to moderate any rate increases,” added Robert Bentley, president of Marsh’s U.S. and Canada division.

Other findings from the report include:

  • Global aviation insurance rates significantly declined at the end of 2013, with most airlines renewing with decreases between 15% and 20%.
  • Rates for catastrophe-exposed property risks in Japan remained largely stable through 2013, albeit still at levels 30% to 50% higher than before the 2011 Tohuku Earthquake.
  • Directors and officers liability rates for financial institutions across the Eurozone either fell or remained stable in the fourth quarter, with the exception of Italy and France, where rates were up 10% to 20% on average.

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