Asia’s composite insurance rate decrease was, on average, more moderate than the global rate of decline in the fourth quarter of 2016, as property insurance rates in the region also declined less than the broader global rate, according to Marsh’s Global Insurance Market Index.
The fourth quarter of 2016 marked an entire year (four consecutive quarters) in which the average rate of decline for global insurance rates moderated — a first since Marsh initiated the index in 2012. It is the fifteenth consecutive quarter in which rates declined, largely due to a global market with substantial capacity and an absence of significant catastrophe losses.
Insurance rates continued to decline, on average, across all major global insurance lines, driven largely by decreases in property insurance pricing.
Overcapacity in the market coupled with an absence of significant insured losses — despite several notable events — kept the pricing environment generally soft.
Early indications that capacity may be moderating and that combined ratios may be increasing could be harbingers of looming rate increases as carriers seek to boost profitability and keep combined ratios below 100%.