US casualty rates continue to rise despite softening market: Marsh

By Aidan Gregory

Feb 5 - (The Insurer) - Intense competition in commercial property insurance and a moderation of casualty rate increases despite “acute” challenges in the US market were among the main drivers of a second consecutive quarterly global rate fall in the fourth quarter of 2024, according to Marsh.

According to Marsh’s Global Insurance Market Index, global commercial insurance rates fell 2% in the fourth quarter of 2024, the second quarterly fall after a 1% drop in the third quarter, following seven years of rising rates.

The accelerated softening of the market is being driven by intensified competition in commercial property insurance, a moderation of casualty rate increases, stabilizing pricing in financial lines, and accelerated rate reductions for cyber risks. While property rates softened by 3 percent globally, Marsh warned that the global property market remains "highly sensitive" to loss events such as the LA wildfires, which are now expected to lead to insured losses of $30bn-$50bn, and may lead up upward momentum on rates, according to the latest industry forecasts.

"The global property market remains sensitive to loss events, particularly the ongoing Los Angeles wildfires, which will likely impact aggregate catastrophe losses in 2025," said Marsh.

By region, the Pacific notched the biggest decline year on year, with the composite rate falling 8%, while the UK fell 5%, Asia was down 3%, Europe decreased by 2% and Canada fell 2%. Latin America and the Caribbean, India, the Middle East and Africa all saw on increase of 1%.

In the US, the world’s largest insurance market, rates were flat in the fourth quarter of 2024, following a 3% increase in the third quarter.

US casualty rates have continued to present “acute” challenges, according to John Donnelly, global head of placement at Marsh. Casualty rates increased by 4% globally in the fourth quarter of 2024, a slower pace than the 6% rise in the previous quarter. But the growth of US casualty rates has continued to outpace all other regions, with a 7% increase in the last quarter, due to the impact of rampant social inflation of US casualty claims in recent years.

“The softening of rates across property, financial lines and cyber are a positive development for clients, while the challenges in other areas of the market, particularly in US casualty, are acute,” said Donnelly in a statement on Wednesday. “We are committed to helping clients manage costs, protect their balance sheets, and successfully navigate the evolving market conditions.”

Financial and professional lines rates fell 6% globally last quarter, the 10th consecutive quarter of declines, while cyber insurance rates fell 7%, with decreases also seen in every region, due to strong competition among new and existing insurers and enhanced security measures taken by companies, according to Marsh.