Global Insurance Market Index - First Quarter 2020 - GC Capital Ideas

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While June 1 reinsurance renewals were challenging, capacity ultimately came together to meet cedents’ needs and the market continued to function well. Similar outcomes are expected at July 1, and looking further ahead to January 1, 2021. The reinsurance sector has shown itself to be well versed at navigating market-changing events, and the overriding message following June 1 renewals is that the market remains well positioned to support insurers through the current period of uncertainty and volatility.

Looking at Marsh’s index of the primary market in the first quarter 2020, global commercial insurance pricing increased for the tenth consecutive quarter. This is according to Marsh’s quarterly Global Insurance Market Index, a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world’s major insurance markets and comprising nearly 90 percent of Marsh’s premium. Marsh is an affiliate of Guy Carpenter.

• The increase, the largest since the index was launched in 2012, comes despite the minimal impact of the COVID-19 global pandemic on pricing in the quarter.
• Average price increases were driven principally by increases in property insurance and financial and professional lines.
• Globally, pricing for property risks increased 15 percent; financial and professional lines rose nearly 26 percent; and casualty increased 5 percent.
• Composite pricing in the first quarter increased in all geographic regions for the sixth consecutive quarter.
• The United States (14 percent), United Kingdom (21 percent), and Pacific (23 percent) regions all experienced double-digit pricing increases.
• As well as increases in property pricing, much of the increase, was driven by increases in financial and professional lines, and directors and officers (D&O) rates in particular.

Guy Carpenter’s view is that the fundamentals of reinsurance remain strong: the sector’s capital base has been resilient to the recent financial market volatility and there are still opportunities in this environment for (strongly capitalized) carriers to offer new solutions and grow selectively into challenged lines.

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