Global Insurance Rates Decline Further
Abundant insurance and reinsurance market
capacity, assisted by the influx of alternative capital,
coupled with a lack of large loss events, has
contributed to a decline in global insurance rates for
the ninth quarter running, according to analysts at
Marsh.
“Competitive market conditions, characterised by an
abundance of global capacity and a lack of large
insured loss activity resulting in reported improved
underwriting results with favourable combined
ratios, helped account for the ninth consecutive
quarter of rate decreases,” noted Marsh.
Commercial insurance rates decreased in various
geographies and across the majority of large
business lines during the second-quarter of 2015, as
the competitive market environment continues to
challenge firms’ profitability.
With pricing in the global property catastrophe
reinsurance market remaining pressured owing to a
lack of major loss events, a glut of capital and
heightened competition, reinsurance market
participants are increasingly seeking to access the
returns of primary business lines.
As a result, notes Marsh; “Surplus levels typically
remained at or near record levels, helping to drive
the competitive marketplace during the second
quarter. Alternative capital continues to flow into the
industry and is creating an additional source of risk
transfer, fuelling competition, and helping to drive
rates lower.”
Marsh Global Industry Specialties and Placement
leader, Dean Klisura, also commented on the
abundance of capital; “While there are some insurers
exiting certain lines of business, overall market
capacity remained abundant during the quarter.
Market capacity
Aiding the market’s overall capacity has been the
willingness of companies to consider capacity
outside their regional geographies. This strengthens
the global nature of the marketplace.”
The observation from Marsh regarding the inflow of
alternative capital in the global commercial property
and casualty (P&C) space isn’t surprising, with other
industry analysts, including MarketScout and Keefe,
Bruyette & Woods (KBW), noting the pressures on
primary lines’ rates in recent times has been
exacerbated by the flood of third-party reinsurance
capital entering the sector.
Furthermore, the benign catastrophe loss trend,
which exacerbates the surplus of capacity, has
continued, “helping drive insurer profitability and
removing near-term catalysts for increased rates,”
notes marsh.
Underlining this point, Bowring Marsh Chief
Executive Officer (CEO), Andrew Chester said;
“Capacity in the international marketplace remains
abundant and, in certain cases, there is an
oversubscription of capacity for limits being
purchased, both of which continue to drive a
reduction in rates and provide additional limits of
coverage.” Continuing to warn that it “is anticipated
that, unless there is a major catastrophe in the
region, the next 12 months will continue to bring
favourable market conditions for clients.”
Despite the negative market commentary and outlook
surrounding Global commercial P&C rates in Marsh’s
Q2 2015 ‘Global Insurance Market Quarterly Briefing,’
emerging, specialty and niche business lines can
offer market players with an additional, diversified
source of revenue, should they be willing and able to
take on the risk.
Marsh highlights this, stating that while rate
decreases were experienced across most major
business lines, “notable exceptions were seen in
specialised coverages led by a firming cyber
insurance market.”
Source: http://vanguardngr.com/2015/08/global-
insurance-rates-decline-further/
capacity, assisted by the influx of alternative capital,
coupled with a lack of large loss events, has
contributed to a decline in global insurance rates for
the ninth quarter running, according to analysts at
Marsh.
“Competitive market conditions, characterised by an
abundance of global capacity and a lack of large
insured loss activity resulting in reported improved
underwriting results with favourable combined
ratios, helped account for the ninth consecutive
quarter of rate decreases,” noted Marsh.
Commercial insurance rates decreased in various
geographies and across the majority of large
business lines during the second-quarter of 2015, as
the competitive market environment continues to
challenge firms’ profitability.
With pricing in the global property catastrophe
reinsurance market remaining pressured owing to a
lack of major loss events, a glut of capital and
heightened competition, reinsurance market
participants are increasingly seeking to access the
returns of primary business lines.
As a result, notes Marsh; “Surplus levels typically
remained at or near record levels, helping to drive
the competitive marketplace during the second
quarter. Alternative capital continues to flow into the
industry and is creating an additional source of risk
transfer, fuelling competition, and helping to drive
rates lower.”
Marsh Global Industry Specialties and Placement
leader, Dean Klisura, also commented on the
abundance of capital; “While there are some insurers
exiting certain lines of business, overall market
capacity remained abundant during the quarter.
Market capacity
Aiding the market’s overall capacity has been the
willingness of companies to consider capacity
outside their regional geographies. This strengthens
the global nature of the marketplace.”
The observation from Marsh regarding the inflow of
alternative capital in the global commercial property
and casualty (P&C) space isn’t surprising, with other
industry analysts, including MarketScout and Keefe,
Bruyette & Woods (KBW), noting the pressures on
primary lines’ rates in recent times has been
exacerbated by the flood of third-party reinsurance
capital entering the sector.
Furthermore, the benign catastrophe loss trend,
which exacerbates the surplus of capacity, has
continued, “helping drive insurer profitability and
removing near-term catalysts for increased rates,”
notes marsh.
Underlining this point, Bowring Marsh Chief
Executive Officer (CEO), Andrew Chester said;
“Capacity in the international marketplace remains
abundant and, in certain cases, there is an
oversubscription of capacity for limits being
purchased, both of which continue to drive a
reduction in rates and provide additional limits of
coverage.” Continuing to warn that it “is anticipated
that, unless there is a major catastrophe in the
region, the next 12 months will continue to bring
favourable market conditions for clients.”
Despite the negative market commentary and outlook
surrounding Global commercial P&C rates in Marsh’s
Q2 2015 ‘Global Insurance Market Quarterly Briefing,’
emerging, specialty and niche business lines can
offer market players with an additional, diversified
source of revenue, should they be willing and able to
take on the risk.
Marsh highlights this, stating that while rate
decreases were experienced across most major
business lines, “notable exceptions were seen in
specialised coverages led by a firming cyber
insurance market.”
Source: http://vanguardngr.com/2015/08/global-
insurance-rates-decline-further/
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