Global insurance rates declined in Q1

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. Rates fell slightly overall in the US, reversing an upward trend in previous quarters.

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.

The US and UK experienced their largest quarterly decline in more than two and a half years – 2.5 percent and 5 percent, respectively. In Asia-Pacific, rate reductions of up to 20 percent became more common for commercial business, in some cases nearing 25 percent, depending on the size of the risk. Latin America recorded the largest average property renewal rate reduction among major global regions, at 7.6 percent.

While the US and Continental Europe saw a slight increase in casualty rates, the casualty market continued to favour 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,” said David Batchelor, president of Marsh’s International Division. “And continuing competitiveness in the reinsurance market also added fuel to pricing reductions in primary markets.”