Commercial insurance prices rise in Chile in the fourth quarter 2023

Commercial insurance prices in Chile rose by an average of 2.5% in the fourth quarter of 2023, according to the Global Insurance Market Index published by Marsh, the world's leading insurance broker and risk advisor and a Marsh McLennan business.

Marsh representative Joaquin Palomer explains that "in Chile, commercial insurance prices increased by an average of 2.5% during the fourth quarter of 2023. In recent months, the markets have shown signs of redeploying capacity in high catastrophe accounts, adding to the fact that the catastrophe loss ratio during 2023 would have improved compared to the previous 4 years, where losses for each year reached more than US$ 100 Billion, These factors, together with the changes and new capacity policies, suggest that we can expect better pricing in 2024".

However, he added that "it is important to keep in mind that the market continues to be rigorous in its risk underwriting analysis. Those clients that have assets with deficient fire protections, or inadequate or incomplete security policies, will continue to face capacity and/or pricing issues."

Palomer points out that in the case of terrorism, sabotage, strike, riot and civil commotion policies, a more mature market and a low loss ratio have been observed in recent times, which has generated more competitive prices and greater interest on the part of the markets. Finally, in terms of liability insurance, prices continue to be rather stable in Chile.

Latin America

At the Latin American level, commercial insurance prices increased 8% in the fourth quarter of 2023, the 24th consecutive quarter in which an increase in these values was observed in the region. Meanwhile, commercial insurance prices rose 2% globally in the same period.

Among the most relevant findings for Latin America are the following:

Property-casualty insurance increased 6% in Q4 2023, showing the first decline in 20 quarters.

-In Brazil, insurers reduced capacity for risks with high limits and poor loss records.

-In Chile, increased competition among insurers led to rate decreases in some industries, such as hotels, construction and universities.

-In Mexico, insurers continued to evaluate rates for catastrophe exposures (CAT) following the Category 5 hurricane that hit Acapulco in late October.

Liability insurance rates increased 11% in the fourth quarter of 2023, compared to a 15% increase in the previous quarter.

-The increases in auto liability insurance were due to inflation and an increase in accidents and theft.

Financial and professional lines prices fell 2% in the fourth quarter of 2023.

-The decline was due in part to increased competition among insurers for market share, as well as the entry of new market opportunities.

-There was a notable shift in insurers' interest in underwriting geopolitical, technology and ESG risks.

Reinsurers' interest in cyber insurance is growing in Latin America with rates increasing by only 3% in Q4 2023.

-There is a growing interest from reinsurers, especially from the UK, to better understand Latin America. This allows for better negotiation of technical terms and the possibility of higher limits.

-Most clients experienced rate increases; companies considered by insurers to have good cybersecurity controls and risk management policies generally experienced smaller increases.

"At a time of great global economic uncertainty, clients will positively value stability in insurance rates, especially for physical property exposures. In addition, there is increased competition among insurers for well-managed risks," concluded Ernesto Diaz, Placement Leader for Marsh Latin America.