By: Luke Jones, Published on August 29, 2016 10:39 PM, Last Update on August 30, 2016 01:49 PM
A new report from broker and risk adviser Marsh shows that commercial insurance rates in the world’s major insurance markets declined during the second quarter of 2016. This represents a trend that has been happening for the past few periods. Marsh points to increased losses from climate events and natural disasters, and economic risks as reasons for the decline.
The Marsh Global Insurance Index was at 0.915 between April and June, the second quarter of 2016. That represents a decrease from 0.923 through Q1 of this year. This drop has been happening consistently for several years, with the past quarter representing the 13th consecutive period that global commercial insurance rates have dropped.
“With continued uncertainty in the global economy, increased insurance capacity and limited catastrophe losses, rates continue to remain competitive in most lines and geographies,” Marsh noted.
During Q2, insurance rates around the world saw a decrease rate of 3.6 per cent, compared to 3.8 per cent during the first quarter of the year. The UK saw the biggest decrease at 4.8 per cent, which is actually worrying. That’s because the impact of the Brexit decision for the UK to leave the EU was not factored in Marsh’s report for the UK’s figures.
“The UK’s recent decision to leave the EU has yet to impact the market, but will continue to be monitored,” Marsh said.
In the United States, rates fell 3.9 per cent and in Asia Pacific the slip was more moderate at 3.4 per cent. Canada played a major part in the results as the Fort McMurray wildfire contributed to an increase in catastrophe losses during the first half of 2016. Other disasters that contributed to this loss were earthquakes in Ecuador and Japan.
Marsh said the events “drove the amount of insured catastrophe losses to above average, which could cause some insurers to begin reconsidering rates.”