US casualty renewal rates increase first time since 2014
The US casualty renewal rates have increased in the first quarter of 2017 for the first time since the third quarter of 2014, according to the latest Marsh Global Insurance Market Index.
Rates in US casualty increased 0.4 percent in the first quarter of 2017 after dropping 2.1 percent in the fourth quarter of 2016. The last time rates in the segment increased was in the third quarter of 2014 with 1.0 percent.
Much of the increase in US casualty renewal rates was attributed to rate movements in auto liability and workers’ compensation.
At the same time, US cyber liability renewal rates decreased for the first time since 2014. US cyber liability rates dropped 1.7 percent on average in the first quarter of 2017. Cyber rates had been growing at above 15 percent during 2015 in the US.
Two trends are impacting cyber insurance rates, according to Marsh. First, overall capacity is increasing as new markets enter and existing markets expand their capacity levels. Second, many clients are now purchasing cyber insurance for the first time, and existing large clients (>$1 billion revenue) are purchasing higher limits as they become more aware of the emerging risks (15 percent increase in limit amounts since 2015).
Overall, global insurance rate decreases moderated for the fifth consecutive quarter, according to the Marsh report. Global insurance rate decreases fell 2.3 percent in the first quarter of 2017 compared to the previous quarter’s decrease of 3.1 percent.
The first quarter of 2017 saw decreases moderate globally across property, casualty, and financial and professional lines. It was also the third consecutive quarter in which global casualty rate decreases moderated (down 0.6 percent), largely driven by the increase in US casualty renewal rates.
Global property rates declined on average by 3.6 percent in the first quarter compared to a decrease of 4.2 percent in the fourth quarter of 2016, while financial and professional lines declined by 2.6 percent, compared to 3.0 percent in the previous quarter.
Commenting on the findings, Dean Klisura, global industry specialties and placement leader at Marsh, said: “The first quarter of 2017 was the sixteenth consecutive quarter in which average renewal rates declined. This trend continues to be driven by a marketplace with significant capacity and a competitive underwriting environment.”
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