For the first time in seven years, global commercial insurance rates have fallen. According to Marsh’s Global Insurance Market Index, rates dropped by an average of 1% during the third quarter of 2024, signaling a significant shift in the global insurance landscape.
The decline marks a notable break from the continuous upward trend in insurance costs, as insurers globally adjust to changing market conditions. The shift is being driven by varying trends across different regions and product lines, each influenced by regional risk environments and claims experiences.
Regional Trends Show Divergence
The rate of decline was not uniform globally, with distinct regional variations. The UK and Pacific regions led the way with notable rate decreases of 5% and 6%, respectively. This could indicate a stabilization of market conditions, reflecting fewer claims or improved underwriting profitability.
Conversely, insurance rates continued to climb in other parts of the world. The United States and the Latin America and Caribbean region both saw average rate increases of 3%. In the US, rates were particularly impacted by heightened risk considerations in property and casualty insurance, as well as inflation-driven cost concerns.
Product Line Movement: Property Leads Decline, Casualty Still Climbs
The property insurance market showed the greatest signs of price relief for policyholders, with global rates declining by 2%. However, the picture varied depending on the region. Property rates are often sensitive to catastrophic losses, which have remained steady in some regions and abated in others.
Casualty insurance told a different story. Globally, rates for casualty insurance increased by 6%, with the US seeing a sharper rise at 10%. The increased cost of excess and umbrella liability coverage drove the US surge, highlighting persistent concerns over large-scale liability claims and the cost of litigation.
Financial and professional insurance lines saw a significant decline of 7%, a trend consistent across all regions. Likewise, cyber insurance rates declined by 6%, continuing the downward trend observed in the previous quarter. This decrease likely reflects the stabilization of the cyber insurance market after several years of sharp rate hikes, as insurers gain better data and analytics tools to assess cyber risks.
Shifting Market Signals
This decline in global insurance rates—albeit modest—suggests an evolving market environment where the factors influencing pricing are changing. Lower catastrophe frequency in some regions, regulatory changes, and a more competitive insurance landscape have likely contributed to the first rate decrease since 2017.
Policyholders in certain sectors are seeing a slight easing of pricing pressures, particularly in property, cyber, and financial lines. Yet, the persistence of rising casualty rates underscores the uneven nature of this change.
Overall, Marsh’s Q3 2024 index provides an optimistic yet cautious outlook for the insurance market, suggesting that while some pressures are easing, risk managers and policyholders should stay informed on product-specific trends. The insurance landscape is in flux, with opportunities for cost savings in some areas but ongoing challenges in others.