Global Insurance Premium Rates Continue to Fall, What Is the Impact on Indonesia?

Jakarta, CNBC Indonesia — The global commercial insurance market has entered an increasingly strong soft market phase, marked by a continuing decline in rates for eight consecutive quarters.

According to the Marsh Global Insurance Market Index for Q2 2026, global commercial insurance premium rates fell by an average of 6% or more in the second quarter of 2026, compared with a 5% decline in the previous quarter. This was also the deepest fall since the market began softening in late 2024.

The decline has been driven by a combination of factors, including high profitability among insurance companies, abundant underwriting capacity, increasingly cheap reinsurance costs, improving investment returns for insurers, and increasingly aggressive competition among insurers.

As a result, competition is no longer limited to price alone, but extends to broader policy coverage, higher coverage limits, lower deductibles, and more flexible policy wording.

Marsh expects these conditions to persist throughout 2026, provided no major global natural catastrophes occur.

John Donnelly, President of Global Placement at Marsh Risk, said current market conditions are likely to continue unless there is a severe storm season in the northern hemisphere or a series of major natural disasters. “This is likely to create additional opportunities for clients to increase coverage and refine programme design, which can position them better to navigate market changes in the future,” he said.

In detail, the majority of business lines contributed to the rate decline, with the exception of casualty lines, which rose by 2%. Property recorded the largest decline at -12%, followed by cyber at -4% and financial and professional lines at -3%.

The fall in property rates was driven by, among other things, abundant reinsurance capacity, competitive pressure, and numerous insurers chasing premium growth. However, underwriting remains tight on catastrophe risk, risk management quality, and exposure accumulation.

Meanwhile, the rise in casualty rates came almost entirely from the United States, whereas most other countries actually saw casualty rates fall. The causes in the US are social inflation, nuclear verdicts, rising litigation, and liability claim severity.

In cyber, the rate decline extends a downward trend spanning twelve consecutive quarters, driven by increased capacity, new entrants, and intense competition. Nevertheless, insurers are beginning to tighten their stance on AI exposure, ransomware, and systemic cyber risk.

By region, IMEA (India, Middle East, and Africa) recorded the largest rate decline at -16%, followed by the Pacific and Latin America at -13% and -9% respectively. Rates in the UK and Canada fell by 8% and 7% respectively, while insurance rates in Europe, Asia, and the US fell by 6%, 5%, and 2% respectively.

The Asian Market

The rate decline in Asia, at the same level as the previous quarter, indicates that the Asian market is relatively stable compared with other regions. The largest declines were driven by cyber and financial and professional lines.

Cyber insurance rates in Asia fell by 8% in Q2 2026, compared with a 6% decline in the previous quarter. First-time buyers in Southeast Asia are increasingly purchasing cyber insurance amid growing government emphasis on cyber resilience. Most territories recorded declining figures, with the exception of Vietnam, which remained stable.

In financial and professional lines, rates fell by 7%, the same as the previous quarter. Professional liability rates declined across most Asian markets but remained stable in Indonesia, Vietnam, Japan, and the Philippines.

Meanwhile, property line rates fell by 5%, in line with the previous four quarters. Insurer capacity and competition levels increased across most markets and industries, enabling some clients to secure better terms, including higher limits and reduced mismatches in coverage.

Casualty lines recorded a 3% decline, steeper than the 2% fall in the previous quarter. Most countries saw declines, although Japan still recorded rate increases. Even so, the Asian liability market remains highly competitive.

Outlook

Marsh assesses that current market conditions remain highly favourable for buyers (a buyers’ market). The market is expected to remain in a soft market phase unless an extreme storm season occurs in the Northern Hemisphere or a series of major natural disasters takes place.

For Indonesia’s insurance industry, Marsh’s findings carry several strategic implications. First, pricing pressure will intensify. With abundant global reinsurance capacity and falling reinsurance prices, domestic insurers will face pressure to lower rates, particularly in property and corporate business lines.

Second, competition is shifting from price to service quality. Differentiation will increasingly be determined by broader policy coverage, higher limits, flexible wording, and the quality of claims service and risk management, rather than simply cheaper premiums.

Third, liability risks still warrant vigilance. Although liability rates in Asia are declining, global litigation trends and rising claim values across various jurisdictions could serve as early warning signals for Indonesian insurers to strengthen underwriting in liability lines.

Fourth, cyber insurance is becoming a key growth area. Falling rates combined with rising capacity create opportunities to expand cyber insurance penetration in Indonesia. However, insurers need to begin developing underwriting policies addressing AI-based risks and increasingly complex cyber exposures.

Fifth, there is momentum for optimising reinsurance programmes. The global soft market opens opportunities for Indonesian insurers to obtain greater reinsurance capacity at more competitive costs, thereby improving capital efficiency while expanding underwriting capacity.