Why Are Global Commercial Insurance Prices Rising?
The insurance industry has seen increased prices on a global scale, with the largest recorded increase occurring in the second quarter of 2019. The 6% rise is the biggest since Marsh’s Global Insurance Market Index Surveys began in 2012.
Price rises worldwide
Whilst price rises have varied globally, there was a common theme. All of the major geographical regions saw increased pricing for the third consecutive quarter. These price rises included 5% for the United States, 6% in the UK, 4% in Asia and an enormous 18% for the Pacific. The next consideration is whether the types of insurance correlate and what is causing the continuous increases.
Which insurance types have seen the biggest increase?
Marsh’s survey revealed that the insurance price rises were greatest for financial and professional indemnity insurance at almost 10%. In addition, property premiums increased by 8% and casualty cover rose by 1%. Regardless of what level of cover is required, insurance quotes have risen continuously across all industries, regions and insurance types for almost two years. But what is causing them to rise?
What are the causes?
Over the last seven quarters, there has been a constant reduction in the marketplace capacity to fulfill specific types of insurance for businesses, with the biggest reduction in limits relating to Directors and Officers policies. Some insurance providers are offering limits between 40% and 60% less than in previous years for D&O insurance, in addition to excess liability insurance and property insurance.
The reduction in the value of limits offered can be attributed to greater losses experienced through property and D&O insurance. This is partially as a result of natural catastrophes becoming not only more severe but also more regular over recent years. This has led to considerable pressure being placed on property insurance providers.
The Director and Officer space has been impacted heavily by an increase in the volume of securities class action claims. There has also been considerable inflation of settlement costs, which has driven price rises in both financial and professional liability insurance cover.
Finally, the insurance industry as a whole is experiencing a notable depletion of their liability reserves. Whilst losses increase, insurance claim reserves appear to be deficient as well. As a result, insurance companies are introducing insurance rate increases to ensure that stakeholders receive better results. Whilst the higher rates help to ensure that stakeholders do not lose out, they result in increased costs for clients.
How can I as a policyholder avoid these increases?
At Robison, we always try to find the very best solution for our clients, focusing on sourcing the optimum cover whilst saving money on your premiums. Whether you are looking to cut the cost of motor insurance for your fleet of vehicles or require advice on reducing risks for your business, we are here to help.
Our experienced team are on hand to discuss every element of your policies. We will offer clear and concise advice on all of the potential risks, ensuring that they are well informed. This also helps us to mitigate the concerns of underwriters, leading to more policy choice and often lower policy premiums.
Robison is an experienced business insurance broker based in Petersfield, providing advice and services to businesses and individuals within Hampshire and the surrounding areas. Our highly trained staff are on hand to offer support and guidance, benefiting from a wealth of experience working with businesses across a vast range of industries. Whether you are looking for public liability insurance or employer liability cover to protect against employee personal injury claims, our team can offer tailored advice and services no matter your requirements.
Contact us today for advice or a quote for your business insurance policies on 01730 265500 or email hello@robison.co.uk
