The prices of commercial insurance in Latin America increased 8% in the first quarter of 2023, against 7% in the fourth quarter of 2022 and against 4% globally, according to the Global Insurance Market Index Published by Marsh, the world’s leading insurance broker and risk advisor and a Marsh McLennan company. It is worth noting that this first quarter of 2023 marks the twenty-second consecutive quarter of price increases.
Among the most relevant findings for Latin America, we find:
- Property damage insurance price increased 8%, compared to 6% in the prior quarter; It was the 18th consecutive quarter of increase.
- Coverage of strikes, riots and civil commotion (SRCC) continued to be a challenge due to political uncertainty in the region, particularly in Brazil, Colombia and Peru. This has led to a certain local dependence on the international market. Despite still being available in local capacities, some limitations or cost increases are being incorporated into reinsurance contracts.
- In addition, we anticipate influence on premiums for catastrophic coverage.
- Liability insurance prices increased 10% in the first quarter, compared to 8% in the previous quarter.
- Specifically in Automobile, we have seen increases in pricing due to the increase in spare parts costs as a direct impact of inflation and even labor. This has generated that local markets exhaustively review associated costs.
- Price increases for financial and professional lines moderated significantly, rising 1%, compared to 8% in the prior quarter.
- D&O and professional liability continued to see competitive pricing as new capacity entered the market.
- State-owned companies experienced price increases due to perceived risk and claims history.
- Cyber insurance prices increased 15% in the first quarter, compared to 33% in the prior quarter.
- The Latin American cyber market has become more competitive, with insurers generally willing to deploy capacity for most industries. In Panama, we still maintain a high dependence on the reinsurance market for Cyber, with relevance in evidencing the level of maturity in cyber risk management.
- The level of cyberattacks in the region will continue to be a major factor in market appetite. Panama does not escape the increase in cyberattacks, specifically in the Panamanian banking and finance sector figures of about 1,313 cyberattacks are handled weekly, a figure revealed during the International Cybersecurity Congress with an emphasis on fraud, which was held in Panama City in March of this year.
Commenting on the report, Ernesto Díaz, Placement Leader for Marsh Latin America said: “It’s nice to see the favorable trends for our clients in D&O and cyber risk, but continued loss activity in property damage lines and an increase in the cost of reinsurance and capital, combined with shortages in certain lines , means that clients continue to face challenging market conditions.”
“To help our customers address these issues, we continue to explore ways to bring new capacity to the lines where it’s needed most, as well as examine non-traditional transfer solutions.”
“Given the challenges of market conditions, we are able to put efficiency and optimization schemes on the table, which in turn guarantee the resilience of their operations. As the main key, to achieve an understanding of the needs and particularity of our clients, it is possible to structure and adjust their insurance program to measure, incorporating analytics with referential data, trends, connected to current events in their industries.
