US catastrophe risk price increases slowed in Q1: Marsh


While overall commercial property insurance pricing continued to firm in the first-quarter of 2021, there was continued evidence of deceleration, according to broker Marsh, particularly in some catastrophe risk exposed areas of the market.

The last quarter of 2020 saw robust commercial property insurance price rises continue around the globe, but broking giant Marsh warned that prices across the US property insurance market were beginning to decelerate.

Now, in the latest edition of its Global Insurance Market Index, Marsh reports that global commercial insurance prices increased by 18% in the first quarter of 2021, but that this was the first quarter to show a fall in the average rate of increase since Q4 2017.

Q4 2017 was the first time that Marsh’s commercial insurance index reported the a rise in global rates, since which steady firming and even hardening has been experienced.

But there has to come a point where the momentum cannot be sustained at such a pace, so a gradual deceleration was to be expected.

Marsh reports “generally slower rate rises in property insurance” across the globe for Q1 2021, with global property insurance pricing up 15% on average, which was down from the 20% increase reported for the fourth quarter of 2020.

Lucy Clarke, President, Marsh Specialty and Marsh Global Placement, commented, “Although we will continue to see price increases in some lines and the market overall will remain challenging for our clients, we expect price increases to continue to moderate throughout the rest of the year.”

For the United States, property insurance pricing increased by 15%, which is the fourteenth consecutive quarter of increases.

However, this was down from the prior quarters 19% average US property insurance price rise, and actually the slowest pace of increase since Q3 2019.


Marsh notes that during Q1, “New capital providers entered the property market,” which may refer to some of the insurance and reinsurance start-up capital that entered the sector in time for the January renewal season.

Also notable for how conditions are in the US insurance market, Marsh noted that pricing increased for 80% of renewing placements, but that 26% of programs saw their limits reduced.

The new capacity that has now entered the space and will continue to is expected to increase competition for insurers in 2021, Marsh believes, which could accentuate the slowdown in rates over the coming months.

UK property insurance pricing also slowed, down from 24% in Q4 2020 to 18% gains for Q1 2021, while Latin America slowed down to 10%, Continental Europe saw property price gains slow to 16%, Pacific to 20% and Asia to 10%.

It’s important to note that all these price increases remain healthy, but are slower than the previous few quarters.

On the catastrophe exposed side of the US property insurance market, perhaps the most notable and important sector for the insurance-linked securities (ILS) and third-party reinsurance capital markets, Marsh reported that “greater reductions” in pricing were seen on catastrophe risks in Q1.

Conversely though, natural catastrophe exposed risks continue to see strong double-digit plus price gains in the Asia region.

Some deceleration in rates was always likely with new capital entering the insurance and reinsurance market, but a return to softening seems unlikely at this time given the catastrophe experience of 2021 so far, particularly in the United States.

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