Pacific Insurance Market Q4 2024: Rates Dip Across the Board
The Pacific region’s commercial insurance market experienced a downward trend in the fourth quarter of 2024, according to Marsh’s latest Global Insurance Market Index. The composite insurance rate change for the region fell by 8% during this period.
Property Insurance
Property insurance rates continued their decline for the third consecutive quarter, dropping by 8%. This decrease is attributed to increased competition among insurers. The report notes that insurers are focusing on premium growth, leading to more competitive lead positions on accounts. Co-insurers are offering larger line sizes on accounts they deem profitable, and oversubscription of placements is common. Accounts seen as more susceptible to environmental, social, and governance (ESG) issues saw limited changes. Claims-impacted accounts faced scrutiny, with insurers hesitant to offer substantial rate reductions.
Casualty Insurance
Casualty insurance rates saw their first decline since the third quarter of 2016, decreasing by 2%. This softening in the market is attributed to increased capacity, which heightened competition, offering insureds lower pricing, broader choices, and more consistent coverage terms. Restructuring of program layers continues to utilize available market capacity and manage the evolving approaches of insurance providers to emerging restrictions, such as those related to polyfluoroalkyl substances (PFAS).
US-domiciled risks — especially those in the auto sector — and clients with past losses faced higher premiums than the general market.
Financial and Professional Lines
Financial and professional lines also experienced a significant decrease, with rates falling by 12%. Strong competition persisted for directors and officers (D&O) liability risks. Long-term agreements (LTAs) were frequently available, often featuring considerable rate reductions. Stable retention levels were supported by low levels of claims activity throughout 2024. Certain large insureds holding retentions above $10 million saw those reduced to $5 million or below, frequently without a corresponding impact on premiums.
Cyber Insurance
Cyber insurance rates fell by 8%, largely influenced by competitive pressures. Rate increases were generally limited to situations with significant alterations in underlying risk profiles. Clients increasingly looked to reinvest premium savings into higher coverage limits, supported by limit modeling analytics. Notifications related to ransomware, extortion, and fraudulent fund transfers increased. The CrowdStrike incident triggered numerous notifications globally, although it did not severely affect the majority of the clients. Insurers have enhanced their offerings and broadened risk management services, placing an emphasis on LTAs and comprehensive coverage. Also, changes to privacy legislation and compliance in Australia introduced fresh requirements, such as mandatory ransomware payment reporting. Despite this, the uptake on increased limits was not widely seen.
Note: The index’s rates reflect the segment mix of Marsh’s client portfolio.
