Market rate index
Composite indicator published by the large brokers measuring rate change at comparable terms from one renewal to the next, the main public thermometer of the underwriting cycle.
Every quarter Marsh publishes its Global Insurance Market Index, and every January 1 Guy Carpenter updates its rate-on-line index for US property catastrophe programs. Those are the numbers the market quotes to say whether things are hardening or softening, since no comparable public statistic exists. What makes them useful is the method. A premium going from 1 million to 1.2 million tells you nothing if exposure, limits or deductibles moved, so the index measures change on a like-for-like basis, across the programs the broker itself renewed, rolled up by line and region. Read them with some care, starting with the sample. It is the publishing broker's own book, with its own client mix and lines, not the whole market. The index tracks price, not margin: a ten point increase against fifteen points of claims inflation is a technical deterioration. And it is blind to everything negotiated outside the rate. Added exclusions, higher deductibles, new sublimits are often where a hard market really bites, and a flat index can hide a sharp tightening of cover.
The indices published by the large brokers at each January 1 renewal have become the market's commented reference, and their turn upward from 2018 then their acceleration after 2022 served as a common marker of the shift into a hard market. Over the same period, tightening cyber exclusions and rising catastrophe deductibles produced an economic effect the rate index, by construction, does not capture.
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