Commercial rate growth slowed to 3.1% in Q2; US property buoyant: Marsh

Global commercial insurance price growth slowed to 3.1% in the second quarter with continued softening in financial and professional lines and slowing cyber rate more than enough to overcome buoyancy in the property segment, the  Marsh Global Insurance Market Index has indicated.

“Composite pricing was relatively consistent across regions, driven largely by rate decreases for financial and professional lines and either decreases or moderating increases for cyber insurance,” Marsh authors wrote.

Property held the double-digit rate of growth it achieved one quarter prior, thanks in large part to the fourth straight quarter of acceleration in the US and a slight uptick in continental Europe, helping buoy the global reading from an easing visible in the UK and the Pacific.

Growth in casualty held tightly to the mid-term run-rate.

Globally, cyber insurance pricing increases moderated to 1%, compared to 11% in the prior quarter and 28% in the fourth quarter of 2022. In the US, prices were down 4% after having gained 11% y/y in Q1.

Q2 became the twenty-third consecutive quarter of growth for the global composite renewal rate, but the slowest rate of growth in years.

In the US, commercial renewal rate growth at 3.9% was off by 0.4 percentage points from the Q1 growth tempo. Relative buoyancy of US pricing - the only market save LatAm to avoid a mid-term low in the headline reading - came as property ticked up to a 19% rate of growth, a high dating back to Q4 2020.

US property rate was primarily driven by the cost of reinsurance and capital, strong capacity demand, limited new carrier capacity and ongoing losses, Marsh authors claimed. The demand side did the work to control price upside in property, with increased retentions and alternative risk transfer methods.

US financial and professional lines priced down 10% year on year on a 13% decline for public company D&O. The Q2 2023 reading is the last that will be measured against the prior hard market: softening began in Q3 2022.

US casualty pricing accelerated fractionally to 3% or 5% excluding workers compensation. Inflation, court reopenings, post-pandemic traffic patterns, and loss severity are all said to be foremost on the mind.

UK pricing appears to be topping off, with the pace of annual increase in the composite renewal index down for the 10th consecutive quarter since a Q4 2020 peak to a mere 0.8% in Q2 2023.

UK property couldn't get the traction seen in the US: price growth slipped to 4% Q2 from a 7% rate Q1 with “discipline for higher hazard industries” but signs of insurers “engaging” with top-tier risk managers.

UK financial and professional lines priced down 6% versus 4% in Q1. Cyber continued to enjoy price gains, up a tick to an 11% annual rate from 10% in Q1.

Continental Europe suffered half a point of slowdown to 4.8% growth in Q2, its seventh decline in the past eight quarters to a low dating back to 2019.

European property accelerated a notch to 8% growth following reinsurance and capital costs, capacity constraints and losses, Marsh said. Financial and professional lines slipped into their first quarter of decline and cyber rate slowed to 3% growth.

Elsewhere, growth for the Asia composite renewal rate slowed for the eleventh straight quarter to a fractional 0.4% annual rate. Growth for the Pacific index dropped to 2.5% after a prior quarter rebound.

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