Q3 2020 has seen the largest ever quarterly rise in global commercial insurance prices according to Marsh’s Global Insurance Market Index.
The global commercial insurance prices rose by an average of 20% in Q3 2020, the largest year-on-year increase since Marsh began releasing the index in 2012.
Marsh said that commercial insurance prices had been rising for three years now, and that they expected to see more increases in the first half of 2021.
Across regions, the UK and the pacific saw the biggest price increases in Q3, at 34% in the UK and 33% in the pacific. The US saw an 18% increase and continental Europe a 15% increase.
Asia and Latin America were the best off, but still saw increases of 12% and 9% respectively.
“This trend started in late 2017, following a series of events — including catastrophe (CAT) events in North America and Asia — that adversely affected insurer financial performance,” the report stated.
“Since then, the rate and breadth of pricing changes across geographies and products has increased. Based on current conditions, we expect the pricing environment to remain challenging in most regions and across most products, with the firming market extending through the first half of 2021.”
Financial and professional liability saw the biggest overall increase, globally rising by an average of 40%.
Directors and officers (D&O) coverage continued to see large price spikes, up by more than 100% in the UK and by almost 60% in the US.
This was despite, according to Marsh, insureds increasing retentions and reducing limits on financial and professional liability lines.
More than 90% of public US companies that are clients of Marsh saw an increase in D&O.
Lucy Clarke, president of Marsh JLT Specialty and Marsh Global Placement, said that conditions were challenging, and that the impact of Covid-19 played a part in price increases.
“Challenging conditions continue to exist across many parts of the insurance marketplace. Uncertainty, particularly related to COVID-19, and loss experience in many lines have both contributed to this three-year trend of increasing insurance costs,” Clarke said.
“For many clients these conditions are occurring at a time when they can least withstand them, and are leading many companies to rethink their insurance buying patterns including increasing retentions, reducing limits, and modifying policy terms and conditions.
“As we expect these challenging conditions to persist into 2021, we are committed to ensuring we leave no stone unturned when it comes to the best outcomes for our clients in this market.”