Insurance pricing in 4Q2020 increases by 11% year-over-year

Property pricing rose by 16% in Asia, the ninth consecutive quarter of increase, according to Marsh's Global Insurance Market Index for the last quarter of 2020.

The report highlights several findings regarding the property insurance line in Asia in 4Q2020, that include:

• Pricing differentials continued to exist between international and domestic insurers.

• The domestic marketplace across most countries insulated small to medium enterprise clients from the sharpest increases.

• Clients with large CAT exposures and those requiring international capacity continued to experience double-digit pricing increases. Casualty pricing remained generally flat, as it has for three years.

• The benign claims environment helped to maintain insurer appetite and competition, and slowed pricing movements.

• Clients with US exposures faced a more challenging market, with upward pressure on pricing.

Pricing of financial and professional lines in Asia

Meanwhile, in 4Q2020, financial and professional lines pricing in Asia rose by 22%, the largest increase observed in several years and the seventh consecutive quarter of increase, says the report.

Highlights in this segment include:

• A reduction in capacity, particularly from global insurers, driven by poor global underwriting results, contributed to pricing increases.

• US-listed D&O was most affected by the increases, which ranged to 100% amid limited insurer appetite.

• Many clients elected for increased retentions to minimise premium increases.

• Financial institutions (FIs) experienced another quarter of pricing increases. For larger FIs in Asia, insurers pushed to increase retentions, which have historically been significantly lower than in the rest of the world. Coverage restrictions were imposed on some clients.

• Cyber insurance was more challenging as the underwriting process sought increased detail and as coverage was restricted in areas such as ransomware.

• Commercial crime experienced capacity withdrawal over concerns about social engineering and phishing-triggered fraud.

Marsh's Global Insurance Market Index is a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world's major insurance markets and comprising nearly 90% of Marsh's premium

Globally, commercial insurance pricing increased 22% in the fourth quarter of 2020, according to the Index. The increase, the largest since the index was launched in 2012, followed year-on-year average increases of 20% in the third quarter and 19% in the second quarter of last year. The Index also shows that price increases may be starting to plateau for some lines of insurance in certain geographies.

Global property insurance pricing was up 20% on average, slightly down from the 21% increase experienced in the third quarter. However, global financial and professional lines were up 47% on average, up from a 40% increase the previous quarter. Casualty pricing was up 7% on average, compared to a 6% increase in the prior quarter. Composite pricing in the fourth quarter increased in all geographic regions for the ninth consecutive quarter.

Source: Asia Insurance Review