After four and a half years of dwindling rates, commercial insurance prices edged up by just under 1 percent in the first three months of the year, marking the second consecutive quarter of growth.
A study by broker Marsh found that the flurry of catastrophes in the second half of last year was slowly filtering through to pricing models.
The 0.9 percent pricing uptick in the first quarter marked a marginal increase on the 0.8 percent increase observed in the final three months of 2017.
Global property premiums were the rocketfuel behind the growth, climbing 2.7 percent in the first quarter. However that lagged slightly behind the 3.2 percent increases measured in Q4.
“Last year’s catastrophe events continue to impact pricing, although there is variability by geography and risk class,” Marsh said.
That growth was bolstered by financial and professional lines pricing, which increased by 1.8 percent at the beginning of the year, ahead of the 0.1 percent increases recorded during the final quarter of last year.
Casualty pricing, however, continued to hamper premium growth for carriers. Marsh found that global casualty rates fell by 1.7 percent during the first quarter, compounding a 1.5 percent decline in the final months of 2017.
In the US property prices climbed by around 3 percent over the last two quarters. “Both catastrophe and non-catastrophe property pricing in the US showed an increase in the first quarter,” Marsh said.
However the broker noted: “The impact of property increases on the composite insurance pricing index for the US was moderated by continued declines in casualty lines.”
It blamed “significant competition in the casualty marketplace” exerting downward pressure on workers’ compensation and general liability pricing.
US casualty rates were down 3 percent in the first quarter, offsetting climbing property pricing in the country. Directors and officers pricing was flat.
Average prices in the UK climbed 0.2 percent. Renewal pricing increased, on average, across financial and professional lines, driven by a deteriorating claims environment that Marsh said had driven price increases in consecutive quarters.
After increasing by 1.1 percent in the final three months of last year, UK property prices fell by 1.6 percent in the first quarter of 2018.
UK casualty pricing fell 2.1 percent but that was offset by a 3.3 percent increase in professional and financial lines pricing.
Aggregate prices fell by 0.9 percent in Continental Europe, a marginal increase on the 0.8 percent measured in Q4.
In Latin America, rates were up 0.8 percent while they fell by 1.8 percent in Asia.
In a statement, Dean Klisura, Marsh’s president of global placement and specialties said: “The impact of catastrophe losses last year continued to impact property insurance prices in the US and elsewhere.
“However, overall market capacity remains strong with pricing decreases continuing in many regions for lines of business less affected by losses.”