FINPRO rates extend downward trend in Q2, Marsh says

By Cate Chapman on August 18, 2015

marsh1Renewal rate changes for financial and professional insurance fell for a ninth quarter in April through June, consistent with the other major lines of business, according to the Marsh Global Insurance Quarterly Briefing.

The global composite rate for coverage that includes directors and officers, employment practices, fiduciary and professional liability lines fell about 5 percent. As with casualty and property, financial products declined across all regions, with the largest decline occurring in the UK, where FINPRO rates dropped more than 7.5 percent.

The renewal rates are taken from weighted renewal rate-change data from 23 major global markets or countries, Marsh said, with the US carrying the most weight, followed by the UK.

Contributing to the quarterly results was an abundance of global capacity and a lack of large insured loss activity resulting in reported underwriting results, Marsh said.

An exception to this trend was demand for transactional risk insurance. Sales of the coverage, including warranty and indemnity or representations and warranties insurance, continued to grow in the first half of 2015, with an overall increase of 15 percent year-on-year in terms of limits placed by Marsh.

Private equity firms continue to be the heaviest users of transactional risk insurance, as they seek ways to reduce indemnity requirements when buying and make clean exits when selling. But corporations, especially in the US and Asia-Pacific, are becoming more comfortable with it, according to Marsh.