Commercial property insurance rates continue to rise around the world, with insurers having a heightened sensitivity to catastrophe exposure in 2023, data from broker Marsh’s latest report shows.
Catastrophe exposed property insurance has been an area of consistent rate increases over the last few years and while the rest of the commercial insurance market may be slowing slightly, the property segment is one that continues to see increases.
Overall, in the second quarter of 2023, Marsh found that global commercial insurance rates continued to moderate, with pricing up only 3% in the second quarter, a slight reduction from Q1.
It was the twenty-third consecutive quarter in which composite commercial insurance pricing rose.
This continues the longest run of increases since the inception of Marsh’s index in 2012. Rate increases peaked at 22% in the fourth quarter of 2020.
Even the US composite for commercial insurance pricing saw a slight decline, despite the country seeing steady rises in property insurance rates.
Commenting on the rate situation, Pat Donnelly, President, Marsh Specialty and Global Placement, Marsh, said; “While the continued moderation in cyber and D&O insurance is a highly positive development for our clients, the continued increases in the property market, specifically property catastrophe, remain an area of concern for our clients, and of focus for us.
“As we move through the second half of 2023, we are working with clients to explore a broad range of options that will help them navigate the challenges ahead amid ongoing economic, inflationary, and geopolitical uncertainty, and achieve optimal outcomes from the insurance market.”
Property insurance saw the largest increases of any line of business in the last quarter, and Marsh noted that property coverage remains a challenge “globally” for its clients.
Global property insurance pricing rose by 10% on average, for the second quarter of 2023, Marsh explained, which was the same as in the previous quarter.
A key driver remains the concerns over the impact of inflation on asset values and claims costs, Marsh explained, as this continues to be a key focus for insurers in most regions.
The tailwind behind catastrophe exposed property insurance rates continues and with insurers concerned over their pricing covering rising exposures and loss costs, the momentum looks set to continue for now.
Insurers also need to cover their reinsurance costs as well, and with momentum in reinsurance pricing also continuing it seems likely the two, catastrophe exposed property insurance and reinsurance rates, could continue to influence each other over the coming year.
While there will be a peak in property catastrophe reinsurance pricing, at some point, the momentum in primary property business will serve to sustain higher reinsurance rates for longer, it appears.