Global Insurance Pricing Increases in First Quarter 2022
Global commercial insurance prices rose 11% in the first quarter of 2022, marking the fifth consecutive reduction in rate increase since global pricing increases peaked at 22% in the fourth quarter of 2020.
It was, however, the eighteenth consecutive quarter that composite prices rose, continuing the longest run of increases since the inception of the Marsh Global Insurance Market Index in 2012.
Cyber insurance pricing continues to show significant rate increases — 110% in the U.S. and 102% in the U.K. for the quarter — and has driven up average pricing in financial and professional lines, globally.
The U.K. had the highest average increase, with composite pricing increases at 20%, down from 22% in the fourth quarter of 2021. Both the U.S. and Pacific also saw composite pricing increases in the double digits — 12% and 10%, respectively.
Latin America and the Caribbean was the only region to see its composite pricing increases rise, from 4% in the fourth quarter of 2021 to 6% in the first quarter of 2022.
All three major product lines showed increases in average pricing globally, though less than the prior quarter: financial and professional lines (26%), property (7%), and casualty (4%).
Cyber Claims and Systemic Exposure Concerns Escalate Financial and Professional Lines in US
The average rate of composite price increase in the first quarter of 2022 in the U.S. was 12% — a slight reduction on the prior quarter (13%). This again was driven by cyber insurance pricing.
Average property insurance pricing for the quarter increased 7%, as it did in the fourth quarter of 2021. Clients with significant losses, poor risk quality, or significant exposure to secondary catastrophe (CAT) perils — including wildfire, convective storm, and pluvial flood — continued to experience above average rate increases.
Casualty insurance pricing increased 4% on average in the first quarter of 2022, which was the same increase as the prior quarter.
Financial and professional lines pricing increased 28% on average this quarter. Though increases are still being driven significantly by cyber insurance price increases, this quarter’s average increase was lower than that of the fourth quarter of 2021 (34%).
Directors and officers (D&O) liability insurance pricing for publicly traded companies increased 3% on average — this was lower than the 6% increase of the prior quarter.
Pricing for cyber insurance increased 110% on average, in large part due to the re-pricing and re-underwriting of cyber risks. Prolific claims activity contributed significantly to pricing increases. The conflict in Ukraine also exacerbated concerns relating to systemic exposures and accumulation risk.
UK Pricing Moderates Despite Rising Cyber Pricing Increases
Composite insurance pricing in the first quarter of 2022 in the U.K. increased 20%, compared to 22% in the fourth quarter of 2021.
Cyber insurance pricing increased by 102% on average, again driven by ransomware claims.
Financial and professional lines pricing increased 39%, on average, down from 43% in the prior quarter. D&O pricing increases demonstrated a degree of moderation, with average pricing increases of 16% in the first quarter of 2022, compared to 24% in the fourth quarter of 2021.
Cyber insurance pricing increased by 102% on average, again driven by ransomware claims; this was up on the prior quarter, which had an average increase of 92%.
Property insurance pricing increased by 9%, compared to 10% in the prior quarter; and casualty insurance pricing increased 3% on average, down from a 4% increase in the prior quarter.
Pace of Pricing Increase in Asia Continues Decline
Composite insurance pricing in the first quarter of 2022 in Asia increased 3%, down from 4% in the prior quarter, as price increases continue to moderate.
Both property insurance and casualty insurance saw average pricing increases of 2% in the quarter; while property insurance was down on the prior quarter’s pricing increases of 3%, casualty insurance increases were 2% for both quarters.
Financial and professional lines pricing increased 13% on average, down from 17% in the prior quarter. The cyber market remained challenging, with ransomware placing considerable pressure on premiums.
Insurance Pricing by Region
Other regional highlights in the first quarter included the following:
In the Pacific, composite insurance pricing increased 10%, on average, down from 13% in the prior quarter. Property insurance pricing increased 8%, on average, mirroring the increases seen in the prior quarter. Losses from the New South Wales and Queensland floods reduced any potential pricing relief. Casualty insurance pricing rose 15%, while financial and professional lines pricing rose 10% — a decrease from 18% in the prior quarter.
Composite insurance pricing in the first quarter of 2022 in Continental Europe increased 6%, compared to 9% in the prior quarter. Property insurance pricing rose 6%, a decrease from 10% in the prior quarter, with CAT-exposed risks experiencing the largest increases. Financial and professional lines pricing increased 9% on average, down from 13% in the prior quarter. The D&O market had an influx of new capacity, which led to rate reductions on select programs with adequate pricing. Average casualty insurance pricing rose 6%.
Average composite insurance pricing in the first quarter in the Latin America and Caribbean region increased 6%, up from 4% in the prior quarter. Casualty pricing in the region was flat, marking a potential shift from decreasing rates in the space. Property insurance pricing increased 8%, up from 7% in the previous quarter. Financial and professional lines pricing rose 11%, down slightly from the 12% increase in the prior quarter.