The global commercial insurance rates market recorded a significant decline in rates not seen in almost seven years. According to the Global Insurance Market Index by Marsh, commercial insurance rates dropped by 1% in the third quarter of 2024.

This is the first time since 2017 that global rates have decreased, driven by growing competition in key sectors, particularly property insurance. According to the report, the moderating trend was evident as property insurance rates globally fell by 2%, a sharp contrast to the 3% rise witnessed in the first quarter of 2024.

Increased Competition and Property Rate Trends

This decline was mainly caused by increasing competition among insurers, particularly in regions like the Pacific, UK, and Asia, which saw substantial decreases of up to 6%. However, not all markets experienced decline rates in the US and Latin America, which rose by 3%, while Europe’s rates remained unchanged.

Still, those with assets in high-risk areas like the US Atlantic coast and the Gulf of Mexico saw lower-than-average declines, as insurers remained cautious due to recent storm activity. While property insurance saw declines, casualty lines moved in the opposite direction. Casualty insurance rates rose by 6% globally, continuing an upward trend driven by significant jury awards in US courts.

In contrast, financial and professional lines, as well as cyber insurance, continued to see rate declines. Global financial and professional lines saw a 7% decrease, marking the ninth consecutive quarter of falling rates.

Regional Highlights: Mixed Results

Meanwhile, cyber insurance rates fell by 6%, continuing a trend of steady declines in this sector. These declines are partly due to more policies, including cyber exclusions, which are pushing businesses to seek alternative ways to cover potential risks from cyber-related damages.

The impact of rate changes varied widely regionally. The Pacific region experienced the most significant overall rate decrease, averaging 6%, followed by a 5% drop in the UK and 4% in Asia.

Canada, India, the Middle East, and Africa also saw moderate declines, while Europe experienced no change at all. In contrast, the US and Latin American markets bucked the trend, with rates rising by 3% in both regions.

This variation highlights the differing market conditions across the globe. While competitive pressures may ease rates in some areas, regional factors, such as legal risks and natural disaster exposures, are keeping rates elevated elsewhere.