Insurance pricing increases moderated across most geographic regions in the third quarter but accelerated in the U.S. amid a surge in cyber insurance pricing.
According to the latest Global Insurance Market Index from Marsh, pricing rose 15% globally for a second straight quarter due to a slower rate of increase in property insurance and directors and officers liability.
It was the sixteenth consecutive quarter of price increases, continuing the longest stretch of growth since the inception of the Index in 2012. But it was the third straight quarter of lower growth since pricing peaked with a 22% increase in the fourth quarter of 2020.
“While the risk and insurance landscape remains challenging around the world, we expect rates to continue to moderate in most lines,” said Lucy Clarke, president, Marsh specialty and Marsh global placement.
However, the U.S. bucked the overall trend with a 14% pricing increase in the third quarter, a slight rise in the rate of increase following three consecutive quarters of a declining rate.
Property insurance pricing rose by 10%, but the big boost came from cyber insurance pricing, which rose 96% in the U.S. due to increased frequency and severity of losses. Cyber pricing trended higher throughout the quarter, increasing 112% in August.
Marsh cited the frequency and severity of ransomware claims, noting that ransom payments frequently exceeded $1 million, with additional claims payments for business interruption or data exfiltration.
“Underwriting scrutiny increased significantly, and many insurers narrowed coverage for ransomware-related losses for companies that failed to show certain levels of maturity,” Marsh said.
Healthcare, manufacturing, education, energy, and public entities were particularly affected by cyber pricing increases, with many insurers declining to quote risks in these sectors, according to Marsh.
The slight increase in property insurance pricing was partly driven by fewer renewals compared with other quarters, as well as the type of industries that generally renew in the third quarter, including manufacturing and other more technical risks.
More than ever, insurers focused on secondary catastrophe perils such as wildfire, convective storm, and flood.