Global Insurance Rates Continue to Moderate in Q1, Except Cyber

Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increases since pricing peaked at 22% in the fourth quarter of 2020, according to the Global Insurance Market Index published by insurance broker Marsh.

The first quarter of 2022 was the 18th consecutive quarter that global composite prices rose, which continued the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012. However, the rate of increase continues to moderate across most lines of business and in almost all geographies, said the Marsh report.

The major exception, said Marsh, was cyber insurance, driven largely by the continued increase in the frequency and severity of ransomware claims with many insurers seeking to tighten coverage terms and conditions, especially in relation to the conflict in Ukraine. “The war in Ukraine exacerbated concerns surrounding systemic exposures and accumulation risk,” added the report.

Rising cyber insurance rates were driven largely by the continued increase in the frequency and severity of ransomware claims with many insurers seeking to tighten coverage terms and conditions, especially in relation to the conflict in Ukraine. Prices increased 110% in the U.S. (down from 130% in Q4 2021), and 102% in the UK (up from 92%).

In the first quarter of 2022, slower rates of increase in financial and professional lines led to moderated rates in most geographies, but financial and professional lines continue to outpace property and casualty lines — driven primarily by cyber pricing — with rate increases averaging 26%, compared to 7% in property and 4% for casualty, the report said.

Global Insurance Composite Prices

Global commercial insurance price increases across most regions moderated due to a slower rate of increase in financial and professional lines. The UK, with a composite pricing increase of 20% (down from 22% in Q4 of 2021), and the U.S., where prices increased 12% (down from 14%) continued to drive the global composite rate.

In the United States, property insurance pricing increases mirrored those of the fourth quarter of 2021 at 7%, said Marsh, noting that clients with significant losses, as well as those that showed poor risk quality, or had significant exposure to secondary catastrophe (CAT) perils — including wildfire, convective storm, and pluvial flood — generally experienced rate increases that were well above average.

Other findings from the survey include:

• Global property insurance pricing was up 7% on average in Q1 2022, down from an 8% increase in Q4 2021.
• Global casualty pricing was up 4% on average, down from 5% in the previous quarter.
• Pricing in financial and professional lines, largely driven by cyber, again had the highest rate of increase across the major insurance product categories, at 26%. However, this was down from 31% in the previous quarter.
• U.S. property insurers appear to be managing their line sizes for secondary catastrophe perils, and tightening their pricing.
• U.S. casualty insurance pricing increased 4%, in line with the fourth quarter of 2021 but excluding workers’ compensation, the increase was 6%.