Composite insurance rates in the Pacific region, comprising mainly the Australian market, declined by 5% in the second quarter of 2024, after falling by 2% in 1Q2024, according to the "Global Insurance Market Index" published by the world's biggest insurance broking group Marsh.
In comparison, global composite insurance rates were flat in 2Q2024, following a 1% increase in 1Q2024.
The Index is a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world’s major insurance markets and comprising nearly 90% of Marsh’s premium. The report outlines the changes in pricing for major branches of business.
Property rates decline
Property insurance rates in the Pacific declined by 4% in 2Q2024, after staying flat in the previous two quarters.
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Long-term agreements (LTAs) were being offered to some clients; some included reductions in year two.
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Small-to-medium sized property clients generally attracted less competition, with rates ranging from no change to 5% increase, on average.
Claims-impacted and catastrophe (CAT)-exposed accounts typically continued to experience rate increases.
Casualty rates nearly flat
Casualty insurance rates in the Pacific market rose by 1% in 2Q2024, after rising by 3% in the first quarter.
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Capacity and competition increased from new and existing markets.
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Underwriting scrutiny continued, particularly in areas such as contractor injury, US exposures, per- and polyfluoroalkyl substances (PFAS), and environmental, social, and governance (ESG).
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Insurers continued to monitor potential claims inflation from litigation trends, including worker/contractor injury claims in Australia that affected back years, particularly for insurers on mining and construction risks.
Financial and professional lines rates decline
Financial and professional lines rates dropped by 12% in 2Q2024, the fifth quarter of decline.
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New market entrants contributed to an increase in capacity and competition.
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Rates for directors and officers (D&O) liability declined in the 15% to 20% range, on average.
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Financial and professional lines rates decreased, but not uniformly across the various product classes.
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Long-term agreements (LTAs) were offered to some clients.
Cybersecurity controls remain a key to rates
Cyber insurance rates declined by 5%.
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Improved competition from insurers generally led to more coverage and retention options for clients, including increased limits, decreased retentions, and improved pricing for maintaining a similar policy structure.
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Insurers’ focus areas included supply chain risk, dynamic privacy regulations, and ransomware.
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Cyber physical damage cover was an area of increased interest for clients.
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Cyber limit quantification is increasingly seen as valuable in understanding an organization's cyber risk exposures.