The global insurance market continued to firm in the second quarter of 2012 continuing a clear trend that began in the third quarter of 2011, according to the Marsh Risk Management Global Insurance Index, launched today. The index, published in Marsh’s latest Global Insurance Market Quarterly Briefing, showed that although rates rose during the second quarter the increase was less pronounced than in the previous two quarters.Marsh’s new index is comprised of client renewal data on property, casualty, and financial and professional lines of business, weighted by premium placed, taken from 20 large economies across all continents.
The composite index, incorporating all these lines, of 1.014 in the second quarter of 2012 indicates that rates at renewal have increased by 1.4 percent compared to renewal rates in the second quarter of 2011.
Claude Yoder, Head of Global Analytics at Marsh, said: “With the global insurance market now clearly in a state of transition, understanding market trends is vital for insureds making business-critical decisions about their future risk management strategies. This pioneering approach to measuring global rate movement is just one way Marsh uses analytics to support clients as they plan their insurance programs.”
According to information from Marsh’s industry experts, the increase in property insurance rates is being driven by unexpected adverse loss developments from last year’s major catastrophes, an increased focus by insurers on the quality of data provided by insureds, a rise in attritional losses, and changes to the way insurers are calculating their risk-adjusted cost of capital.
While the index shows that insurance rates for financial and professional lines declined slightly after rising during the previous two quarters, the overall trend suggests that the multiyear slide in liability insurance rates is coming to an end.