World VisionState of the Market: Property & Casualty session Insurance Roundtable - Virtual17 September 2020
Nick Robson
Global Specialty Head, Credit Specialties
London, United Kingdom
MARSH JLT SPECIALTY 116 September 2020
Global Insurance Pricing Increase for eleventh consecutive quarter
Global Insurance Composite Pricing Change
SOURCE: MARSH GLOBAL ANALYTICS
-3%-3% -3%
-2% -2% -2%
1% 1% 2% 2%2%
3%
6%
8%
11%
14%
19%
Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
*Note: All references to pricing and pricing movements in this report should be considered averages, unless otherwise noted. For ease of reporting, we have rounded all percentages regarding pricing movements to the nearest whole number.
- Q2 rise in pricing was the largest year-over-year increase in the Marsh Global Insurance Market Index since its inception*
- 19% price rise in Q2 2020
Source: Marsh Global Analytics
MARSH JLT SPECIALTY 216 September 2020
Global Insurance Pricing Increase across major product categories
• Property: 19%
• Casualty: 7%
• Financial and professional liability: 37%
10%
13%15%
19%
2%3%
5%7%
14%
18%
26%
37%
Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20
Global Composite Insurance Pricing Change – By Coverage Line
SOURCE: MARSH GLOBAL ANALYTICS
Global Property Global Casualty Global FinPro
Source: Marsh Global Analytics
MARSH JLT SPECIALTY 316 September 2020
Global Insurance Pricing Increase in all regions for the seventh consecutive quarter
Composite Insurance Pricing Change – By Region
SOURCE: MARSH GLOBAL ANALYTICS
US UK Cont. Europe Latin America Asia Pacific
6%
10%
14%
18%
12%
14%
21%
31%
4%
7%8%
15%
5%
7%6%
8%
5% 6% 6%
9%
19%
21%
23%
31%
Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20 Q3 19 Q4 19 Q1 20 Q2 20
Source: Marsh Global Analytics
MARSH JLT SPECIALTY 416 September 2020
Size of Country Economic Risk Score Increase by RegionLargest economic risk (2+) / Smallest economic risk (0.0 - 0.4)
Source: Marsh JLT Specialty World Risk Review portal
MARSH JLT SPECIALTY 516 September 2020
Impact of the Lockdown on Speculative Grade Default RatesUseful proxy for the risk outlook for a significant proportion of the credit risk insured today
Source: Moody’s Investors Service July 2020 Default Report
MARSH JLT SPECIALTY 616 September 2020
Moody’s 1 Year Default Rate Forecasts by Industry Default rate changes between Jan-Jun 2020 have varied significantly by industry
Source: Moody’s Investors Service July 2020 Default Report
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0%
Utilities: Electric
Sovereign & Public Finance
Banking
Utilities: Oil & Gas
Insurance
Energy: Electricity
Real Estate (REIT)
Forest Products & Paper
Finance
Beverage, Food, & Tobacco
Transportation: Cargo
Transportation: Consumer
Media: Diversified & Production
Chemicals, Plastics, & Rubber
Construction & Building
Media: Broadcasting & Subscription
High Tech Industries
Healthcare & Pharmaceuticals
Telecommunications
Containers, Packaging, & Glass
Capital Equipment
Aerospace & Defense
Environmental Industries
Media: Advertising, Printing & Publishing
Metals & Mining
Consumer goods: non-durable
Energy: Oil & Gas
Retail
Wholesale
Services: Consumer
Services: Business
Consumer goods: durable
Automotive
Hotel, Gaming, & Leisure
Jan July
MARSH JLT SPECIALTY 716 September 2020
1YR Bonds Over U.S. Treasury – Spreads by RatingBond spreads have been trading with volatility across all speculative grades at approx 2X the average spreads in the prior year
Source: Moody’s Insights
MARSH JLT SPECIALTY 816 September 2020
COVID-19 Announced Losses Versus Top-down Industry Estimates
Source: Guy Carpenter
MARSH JLT SPECIALTY 916 September 2020
Lockdown Crisis Loss Estimates$100bn of industry loss for the insurance market in 2020 is realistic
Source: Guy Carpenter
MARSH JLT SPECIALTY 1016 September 2020
Alternative Capital Growth Versus Property Catastrophe PricingRetro market has seen a rapid growth in the participation of alternative capital
Source: Guy Carpenter
MARSH JLT SPECIALTY 1116 September 2020
Credit Specialties 2YR GFC Premium, Loss, and Loss Ratio EstimatesPremium income = $19bn in 2008. $27bn in 2019
Source: Marsh Internal Analysis
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