11 November 2016 Insurance

Rates decline for 14th consecutive quarter, but deterioration less marked

Global insurance rates declined for the 14th consecutive quarter in the third quarter of 2016, although the rate of decline moderated by weighted average for the third quarter in a row, according to Marsh’s Global Insurance Market Index covering the third quarter of 2016.

The report said that the continued availability of capacity in the insurance market has generally kept pricing stable to competitive in most lines of business and geographies worldwide, although the rate of decline in property insurance specifically moderated for the third quarter in a row.

It partly attributed this to a flurry of natural catastrophe losses this year. Losses stemming from Hurricane Matthew — the first Category 5 Atlantic hurricane since Hurricane Felix in 2007—are currently being estimated at between $1.5 billion to $5 billion in insured losses for the US and the Caribbean, it noted.

Other natural catastrophe events occurring in the first half of 2016 have contributed to above average catastrophe losses ($27 billion of insured catastrophe losses for the first six-month period of 2016, compared with $19 billion for the same period the year before), including the Fort McMurray wildfires in Canada, earthquakes in Ecuador and Japan, and flooding in the US and continental Europe (with the US accounting for nearly a quarter of those global insured losses in the first half of 2016, due to $8.8 billion in storm losses in Texas).

The report said that while global property insurance renewal rate decreases were generally larger than for other major coverage lines, the amount of surplus capacity has been moderating since the fourth quarter of 2015. “This has helped moderate the rate of decline for property for the third quarter in a row, on average,” the report said.

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