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Cyber prices surge in Q3, climbing rates make inflection to soft P&C market ‘unlikely’

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Rates in the P&C market continued to rise in the third quarter, with outsized increases for cyber insurance driving up the average change, according to data revealed in company third-quarter conference calls.

On the cyber front, Marsh McLennan vice chairman John Quinlan Doyle pointed to a 90% rate surge in cyber lines, driven by spikes in ransomware claims, as well as concerns about systemic events.

“Without question, the market that is most challenging at the moment is the cyber market,” Doyle said. “We’ve got a few events that may be modest compared to what potentially could happen, but underwriters remain concerned about that.”

Overall, prices were up about 15% on average in the quarter, which was consistent with the second quarter, Marsh said. Some of the key broader issues that are driving up rates remain concerns over social inflation and catastrophe loss activity.

“Many of the factors that drove the market to harden over the last few years continue, suggesting an inflection to a soft market is unlikely in the near term,” Marsh McLennan president and CEO Daniel Glaser noted.

Travelers CEO Alan David Schnitzer agreed that the firm expected the pricing environment to remain strong, given “social and other inflation, the frequency and severity of weather-related loss activity and the low interest rate environment”.

In contrast, J Powell Brown, Brown & Brown’s president and CEO, said that premium increases will “continue to moderate” for many lines, except for cyber, professional excess and auto.

For the P&C market at large, Brown & Brown found that rate increases remain “relatively consistent” with prior quarters, with admitted market rates up 3%-8% across most lines.

Outliers included workers’ compensation rates, which are down 1%-3%, commercial auto rates, which are up 5%-10%, and professional liability, which soared 10%-15%+.

Amongst other major primaries, Chubb reported that in major accounts, rates increased in the quarter just by over 13%. General casualty rates were up about 21% and varied by category of casualty. Property rates were up 12%, and financial lines rates were up 17%.

AIG pointed out that this was the third year in which the company achieved double-digit rate increases in its portfolio.

The carrier’s overall 11% rate increases were balanced across its portfolio, the company said, and led by excess casualty, which increased over 15%, financial lines, which also spiked over 15%, and Canada, where rates increased by 17%.

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