Composite commercial rates in Asia fell by 3% in Q2 2024, according to Marsh’s Global Insurance Market Index, published on Wednesday. The financial and professional lines segment saw the largest decline in the region, dropping by 9% in Q2.
The commercial property insurance segment decreased 2% in Q2 2024, marking the second consecutive quarter of year-over-year rate decreases. Marsh attributed the decrease to increased competition among insurers.
While some clients experienced reductions, rates rose moderately for risks highly exposed to natural catastrophe events. Insurers are closely monitoring inflation and the accuracy of declared values, including for business interruption, Marsh said.
There has also been increased engagement of captives and other alternative risk solutions from clients undergoing program restructuring to manage costs. This often involves retaining more risk, particularly in the loss-exposed layers of programs, the market report noted.
Financial lines nears double-digit drop
The financial and professional segment saw the biggest decline, dropping 9% in Q2. Rates for financial institutions (FIs) and professional indemnity (PI) insurance declined in the 10% to 15% range, on average.
A lack of activity in the capital markets has limited insurers’ opportunities for new business, resulting in increased competition at renewal.
Marsh noted there was ample available capacity for D&O coverage has led to increased competition. Some markets, including China, Hong Kong, South Korea, and Singapore, experienced average double-digit rate decreases in D&O liability renewals.
Cyber insurance rates decreased by 6%, with new capacity in the Singapore market and growing interest from the London market contributing to increased capacity and competition.
Underwriters continued to require strong cybersecurity controls and/or plans for improvements. Marsh said.
Insurers were generally more flexible in how cybersecurity-related information was delivered to them and continued to increase their focus on risks associated with AI usage. Insurers were also more willing to offer broader coverages, the report notes.
The industry will monitor Q3 cyber rates following the CrowdStrike cybersecurity update last week, which rendered 8.5 million Windows devices inoperable and impacted various sectors, including finance, healthcare, and travel.
Casualty and global rates
Casualty insurance rates also declined slightly, by 1%, in the second quarter. The amount of available capacity remained stable, with a few new market entrants, according to Marsh.
Underwriters continued to scrutinise North American exposures, while auto liability and workers’ compensation rates remained stable. Increased claims activity has been observed in Hong Kong and Singapore.
Asia’s 3% rate decrease arrived amid global commercial insurance rates being flat in the second quarter of 2024. This is the first time in nearly seven years, since the third quarter of 2017, that the composite rate did not show an increase globally.
The composite rate declined or moderated in every region except India, Middle East, and Africa (IMEA).
