Global insurance rates declined in the first quarter of 2014, driven largely by a continued softening in property rates, according to Marsh’s latest Global Insurance Market Quarterly Briefing. The Marsh Risk Management Global Insurance Index declined for the fourth consecutive quarter and is now at its lowest level since the third quarter of 2012.
According to Marsh, a mix of strong competition with ample capacity and a scarcity of major events contributed to a drop in property insurance rates across all major regions in the first quarter.
In Asia-Pacific, rate reductions of up to 20% were widespread for commercial business, in some cases nearing 25%, depending on the size of the risk.
Rates fell slightly overall in the US, reversing an upward trend in previous quarters. The US and UK experienced their largest quarterly decline in more than two and a half years — 2.5% and 5%, respectively.
Latin America recorded the largest average property renewal rate reduction among major global regions, at 7.6%.
While the US and Continental Europe saw a slight increase in casualty rates, the casualty market continued to favor insurance buyers, with rates remaining generally stable overall and decreases being recorded across Latin America, Asia-Pacific, and in the UK.
“The first quarter saw marked evidence of additional capacity flowing into the global market, primarily from existing players looking to increase their market share in particular lines of business or growing territories,” commented David Batchelor, president of Marsh’s International Division. “And continuing competitiveness in the reinsurance market also added fuel to pricing reductions in primary markets.”
The professional liability market remained stable overall, with rates on average flat or declining by up to 10% in Australia, France, Germany, India, and Korea, depending on the quality of the risk.
Italy and Spain were the only countries in the Eurozone to experience a rate increase for financial institutions coverage during the first quarter, with rates on average flat to up 20%.
Total insurable values continued to increase modestly, as economies recover from the global financial crisis. Buyers that provide property underwriters with complete and accurate data are best positioned for more favorable terms at renewal.