Global commercial pricing slows to 6% in Q3, pro & fin lines collapse

Global commercial insurance pricing rose 6% in the third quarter of 2022 after 9% growth in Q2, with major regions and lines converging towards the mid-single-digit growth rates, according to the Marsh Global Insurance Market Index.

The pace of rate increase slowed for the seventh consecutive quarter from the Q4 2020 peak when the Marsh index hit 22%. Growth had been double-digit uninterrupted from Q4 2019 through Q1 2022.

Cyber insurance pricing increases again outpaced other products; however, cyber insurance pricing increases also moderated to 53% globally, including to 48% in the US and 66% in the UK.

Financial and professional lines, now counted ex-cyber, slipped to a 1% index decline, the first decrease in financial and professional lines since the third quarter of 2017.

Regions are converging towards mid-single digit growth rates, with 5-7% growth readings now visible across the US, the UK, continental Europe, Latin America and the Pacific. Asia remains the pricing laggard, having fallen to a 2% growth rate from 3% rats across the prior two quarters.

For the US and UK markets, that convergence has meant a notable slowing. Both markets had double digit growth rates for their pricing indexes just one quarter prior. The UK was at a 20% reading just two quarters ago.

The decline for US pricing indexes came even as pricing for property edged up from 6% in Q2 to 8% in Q3. Total insured values were said to have risen by 8% and rate gains were driven by reinsurance costs, March analysts wrote.

The US casualty pricing index slipped from 6% growth in Q2 to 3% in Q3. The decline includes an outright loss in workers comp and a drop off in financial and professional lines to a 6% Q3 decline. That includes continued losses in D&O pricing for publicly listed firms to a negative 9%.

UK property and casualty pricing indexes have held more stable Q2 to Q3, but the UK suffered a similar drop off in the pricing index for financial and professional lines from 19% growth in Q2 to flat rate Q3.

Average pricing in continental Europe across major business categorised has proven considerably more stable, including in financial and professional lines, up 6% in Q3.

The president of Marsh Specialty and Global Placement, Lucy Clarke, said: “The global business environment remains tough for clients. Ongoing inflation and geopolitical instability are affecting all sectors and we expect even more challenging conditions in the already strained property catastrophe market following Hurricane Ian.

The twenty consecutive quarters of index gains is the longest run of increases since the inception of the index in 2012, Marsh noted.

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