Commercial property rates in catastrophe-prone areas are likely to see steeper increases in the coming months even as overall pricing conditions continue to ease, broker Marsh says after the release of its latest quarterly update.
Australia commercial rates for all renewals went up 5% in the December quarter, the same as the previous three-month period, according to Marsh’s Global Insurance Market Index released overnight.
Property rose 4%, similar also to the prior September quarter, but loss-impacted and catastrophe-exposed clients saw higher increases after last year’s record floods and other natural disasters.
Marsh says underwriters continued to focus on catastrophe perils and that insureds’ commitment to continual risk improvement was critical to success at renewal.
“The only class of insurance where we’ve got some concerns… is property insurance,” Head of Global Placement Asia & Pacific John Donnelly told insuranceNEWS.com.au today.
“For those clients who’ve got poor loss records and are in catastrophe, zones, life could be very difficult.”
He says reinsurance rates increases are “really only impacting” the property line at the moment and “those reinsurance costs have got to be paid for and that’s going to have an impact on premiums”.
With the exception of property, he says “everything is tracking in the right direction… for buyers”.
Overall rates in the Australia-led Pacific market have been rising at a slower pace since peaking at 22% in the fourth quarter of 2020, according to the Marsh index. Australia makes up about 80% of Pacific business renewals tracked by the index.
For the other two lines monitored by the index, casualty increased 10% – the same as the previous quarter – while financial and professional “flattened” out at 0% after a 4% rise.
Marsh says directors’ and officers’ (D&O) pricing continued to moderate, as did other financial and professional lines.
Cyber went up 28% and is expected to remain “challenging” but Marsh says the pricing has been “decelerating” after signs of stabilisation in the second-half of last year.
“It is definitely moderating,” Head of Cyber Pacific Kelly Butler told insuranceNEWS.com.au.
She says the December month average pricing for cyber was up 17.1% and a year ago it was about 100%.
“So the decline has been significant,” Ms Butler says. “There is stabilisation in rates and the general consensus is that the corrections made over the last year and a half have worked. The underwriters are now more confident in how they underwrite cyber risks.”
Globally insurance prices grew 4% in the fourth quarter of last year, slower than the 6% rise seen in the previous quarter.
Marsh says the overall pace of pricing increases slowed for the eighth consecutive quarter after peaking at 22% in the fourth quarter of 2020.
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