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4Q2022 composite insurance pricing rises slowly but cyber insurance premiums soar

Insurance pricing in the fourth quarter in Asia increased by 2%, the same as in the prior quarter, according to the 4Q2022 "Global Insurance Market Index" report released yesterday by leading global insurance broker Marsh.

The growth rate for the last two quarters was the lowest for the year, with rates of increases in Asia composite insurance pricing standing at 3% in both 1Q and 2Q.

The rates of increase in prices in Asia in 2022 lagged behind those of commercial insurance prices globally. Worldwide, the increases were 11% in 1Q; 9% in 2Q; 6% in 3Q and 4% in 4Q. For 2022 as a whole, Asia exhibited the lowest increase in insurance pricing compared to other regions in the world.

The pricing situation in Asia in 4Q2022 is summarized as follows:

Property insurance pricing rose 2%, the same as in the third quarter.

  • Due to continued concerns regarding inflation, insurers maintained focus on updated and validated valuations of assets and business interruption calculations.

  • Underwriters continued to focus on CAT and secondary CAT perils.

  • Renewal results again favoured clients with exemplary claims performance and strong risk management practices.

Casualty insurance pricing declined by 1% in the fourth quarter.

  • Casualty pricing in Asia decreased in the fourth quarter for most industry segments; however, some experienced tightening of terms and conditions.

  • The market remained challenging for product recall and US-exposed product liability, with capacity being secured from London subject to its pricing and conditions requirements.

  • Auto liability and workers’ compensation renewals experienced decreased pricing in a number of territories and held stable in others.

  • Insurers continued to demonstrate caution due to claims inflation resulting from litigation trends and material cost increases.

  • Insurers continued to focus on updating policy wordings, ensuring the application of updated sanctions clauses and exclusions associated with per- and poly-fluoroalkyl substances (PFAS), cyber, terrorism, punitive damages, and contractual liability.

Financial and professional lines pricing increased by 2%, compared to 5% in the prior quarter.

  • D&O rates began to stabilize, with non-US-exposed businesses experiencing decreases of up to 10%.

  • Additional capacity entered the market; combined with 2022’s low level of IPOs, SPACs, and deSPACs, this generated strong competition on traditional risks.

  • Pricing began to moderate for FIs and was considered stable for large and complex accounts.

Cyber insurance pricing increased by 22%, an improvement from recent quarters.

  • Conditions in the cyber market continued to improve as new entrants drove an increase in capacity, markets actively indicated a desire to grow their portfolios, and many clients were able to eliminate sub-limit and coinsurance requirements around ransomware (usually for an additional premium).

  • Clients in specific industries remained vulnerable to wholesale insurer appetite changes to their industry.

  • Due to claims activity, telecommunication clients experienced a pullback in appetite for cyber and tech E&O risk, resulting in pricing increases above average.

The "Global Insurance Market Index" is a proprietary measure of global commercial insurance premium pricing change at renewal, representing the world’s major insurance markets and comprising nearly 90% of Marsh’s premium.



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