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Insurance pricing moderates as rates decline

Pricing of insurance is continuing to moderate as rates decline, according to Marsh's May 2024 report, Asia Insurance Market Pricing: 2024 First Quarter. In Asia, rates in 1Q declined 2% after remaining flat for three prior quarters.

“A continued moderation in insurance rates, and an increased appetite among insurers particularly for well-managed risks, will be welcomed by clients that continue to face major global economic and geopolitical uncertainty.

“In a rapidly changing risk landscape, organisations will be under pressure to improve their risk management capabilities and make themselves more resilient to global shocks,” Marsh Specialty and Global Placement, Marsh president Pat Donnelly said.

With the exception of markets with exposed CAT and business interruption (BI) risk – such as China, Japan, the Philippines and China and the technology sector respectively – property insurance rates declined in Asia by 1%.

The report said that “clients in these sectors typically retained more risk through increased deductibles, assuming capacity within their insurance programme, or adopting alternative risk transfer methods such as captives, parametric, or structured solutions”.

Insurers in Asia also continued to “seek validation of values and a deeper understanding of clients’ BI calculations”, even though inflation has not been as pressing in Asia, according to the report.

Casualty insurance rates also declined by 1% in the first quarter of the year.

According to the report, the liability insurance market remained stable, though there were some rate decreases. The decreases, the report said, were because of “ample capacity, from domestic and international insurers in the markets”.

Insurers also remained focused on cyber coverage for BI and property damage, as well as exposure to polyfluoroalkyl substances (PFAs), the report cited.

According to the report, cyber insurance rates went down by 3% in Asia over the quarter. Underwriters also continued to “favour companies with strong risk controls”.

The increased capacity in the market has led to insurers discussing expanding coverage options. Insurers also remained wary of ransomware issues and supply chain attacks, the report said.

“There remains the potential for volatility should a major cyber event occur, or loss frequency significantly increase,” the report said.

Over 1Q, financial and professional lines rates declined by 6% as well.

The report said that “many clients experienced rate decreases in public and private directors and officers liability, commercial professional indemnity, financial institutions and flat rates in lines such as crime”.

According to the report, increased competition also contributed to reduced primary rates and improved terms and conditions.

However, it also said that “appetite for digital assets business remained challenging, with insurers exercising caution, particularly with crypto related assets”.


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