Global insurance rates continue to firm: Marsh

Global insurance rates continued to firm on average in the first quarter of 2013, following a trend established over the previous 18 months, according to figures released in Marsh’s latest Global Insurance Market Quarterly Briefing. 

Many parts of the world had, in general, a stable rate environment, according to Marsh. Most major insurance lines saw rate increases of 2% to 4% in the United States, while  outside the country, rates overall decreased by an average of approximately 1%.

This is the fifth consecutive quarter of a global rate average, according to the Marsh Risk Management Global Insurance Index, which represents a composite or weighted average of rate change activity over the preceding four quarters.

The index, based at 100.0 in the second quarter of 2012 , rose by 0.1 points to 101.3 in the first quarter.

Overall, rates renewed with an increase of 0.3% in the first quarter of 2013, following an increase of 1.2% in the fourth quarter of 2012. Global property rate typically declined on renewal during the quarter by 0.2%, while financial and professional lines generally increased by 0.8% on renewal and casualty insurance renewed up 0.7%.

“Underlying these market conditions are very strong capacity and increased support for business among some global insurers for both catastrophe- and non-catastrophe-exposed property risks,” according to the briefing. “However, property rates rose in the U.S. Northeast and insurers restricted coverage for flood-exposed properties through increased retentions or peril-specific sublimits following October’s Superstorm Sandy.

“In international geographies, 2012 was a relatively quiet year for natural catastrophes and insurer capacity was comparatively greater. First-quarter property rates in international regions were down slightly overall from the first quarter last year,” Marsh noted. 

“While rates continue to rise, insurers have a healthy appetite for business and this is making conditions progressively more favorable for insurance buyers. Underlying this trend are both strong capacity and increased interest from many global insurers,” Dean Klisura, Marsh’s U.S. Risk Practices and Specialties leader added.