Global commercial insurance pricing surge 19% in Q2 2020

Global commercial insurance prices saw the largest increase on record in the second quarter of 2020, driven by COVID-19 and other large losses in the period, according to Marsh.

Average commercial insurance prices went up 19 percent in the quarter, the largest increase since the index was launched in 2012, said Marsh. It follows year-over-year average increases of 14 percent in the first quarter and 11 percent in the fourth quarter of 2019.

As with the first quarter, average price increases were driven principally by increases in property insurance rates and financial and professional lines.

According to the insurance broker's survey, global property insurance was up 19 percent and global financial and professional lines were up 37 percent, while global casualty pricing was up 7 percent on average.

The composite pricing in the second quarter increased in all geographic regions for the seventh consecutive quarter.

Pricing increases in these regions were largely driven by increases in property and directors and officers (D&O) coverages. The US (18 percent), UK (31 percent), Continental Europe (15 percent), and Pacific (31 percent) regions all had double-digit pricing increases.

However, certain D&O markets saw large increases. For example, US public company D&O prices were up 59 percent on average, with more than 90 percent of clients experiencing an increase. In the UK, D&O pricing increases average over 100 percent. Marsh noted a similar situation was seen in Australia, where a lack of competition has resulted in capacity shortage.

Dean Klisura, president, global placement and advisory at Marsh, said: “While pricing movements this quarter were impacted by losses related to COVID-19, other large losses contributed to overall pricing pressures. As insurers continue to work through claims in property and D&O, and with the full cost of COVID-19 still developing, upward pressure on pricing is anticipated for the balance of 2020.”