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.
Comparing two premiums year over year says nothing if exposure, limits or deductibles have changed. Rate indices solve that by measuring change at comparable terms, on a sample of programs renewed by the same broker, aggregated by line and region. They are published at each major renewal date and serve as the market's common reference, absent any equivalent public statistic. Three precautions govern their reading, and they are systematically forgotten in market commentary. The sample is that of the publishing broker, so it reflects its own book rather than the whole market. The index measures price, not margin: a ten percent increase against fifteen percent claims inflation is a technical deterioration, not an improvement. And it ignores non-price terms, added exclusions, raised deductibles, reduced limits, which are sometimes where the hardening actually happens, so a flat index can conceal a considerable 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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