NEW YORK (Reuters) – Global average commercial insurance prices increased 14% in the first quarter, driven in part by rises in property insurance rates, insurance broker Marsh said in a report released Monday.

The change marks the highest year-over-year increase since 2012, when Marsh launched its Global Insurance Market Index for rates.

Pricing was trending higher in the first quarter prior to any meaningful impact from losses associated with COVID-19, said Dean Klisura, president, global placement and advisory services at Marsh, adding that the pandemic will likely have an impact on pricing for the rest of 2020.

Globally, on average, pricing for property risks increased 15% while financial and professional lines rose nearly 26% and casualty increased 5%, Marsh said.

The increases, particularly for property and financial lines coverages, continue a repricing trend that has been shaking out in the industry, said Christopher Lang, Marsh global placement leader for the United States and Canada, in an interview.

Recent years have proved challenging for directors and officers coverage, a financial lines product that companies use when their executives are sued. The policies pay the executives’ defense costs and penalties awarded by the courts. But lawsuits and awards mounted, pushing up premiums and reducing the amount of cover offered.

Property rates have been increasing since at least 2018, as insurers, battered by numerous natural disasters, correct soft pricing and limits that curbed their profitability. Many insurers have also ramped up inspections and engineering requirements of insured properties, demanding that owners make improvements to limit risks.

Having initially brushed off the potential impact from coronavirus-linked claims, global insurers have woken up to the prospect of a double whammy – a sharp rise in payouts at a time of big investment losses.

Executives, lawyers and analysts say the cost is sure to be multiples of prior catastrophes such as Hurricane Katrina, the Tōhoku tsunami or the 9/11 terrorist attacks. That could be tens of billions to half a trillion dollars or more, depending on how long the pandemic lasts and other variables.

Insurers have been fielding a growing number of notices from customers who intend to file various types of claims, including those for lost business revenue, Lang said.  

“We know there will be an impact in the market, the extent of which is still unknown,” said Lang, who expects an increase in claims for D&O and employment practices liability coverages.