Q1 Automobile Summary
Overall (Moderate)
Market conditions have been moderate for most risks, while poor performing and/or difficult risk types have experienced challenging conditions, as loss frequency and severity has continued to challenge insureds and insurers alike.
Pricing (+1-10%)
Most placements have renewed with modest rate increases while challenging or poor-performing risk types have experienced significant rate increases.
Capacity (Abundant) Capacity has generally been sufficient; however, it has been constrained for heavy vehicles, car rental risks and passenger transportation risks.
Underwriting (Prudent) Underwriters have generally been cautious, however, there has been some flexibility, especially for well-performing risks.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Increased) Deductible increases – primarily driven by inflation – have been imposed.
Coverages (Stable) Expiring terms and conditions were achieved in most cases. A new usage-based product has been introduced, but take-up has remained low relative to traditional products.
A Look Ahead (Moderate) The market is expected to become slightly more challenging as insurers continue to respond to rising costs and frequency. Continued innovation of insurer pricing models is expected.
Q1 Cyber Summary
Overall (Challenging)
The market has remained challenging as rates continued to rise, capacity continued to contract, and ransomware risk remained volatile. The number of organizations seeking coverage has continued to grow.
Pricing (>+30%)
Sharp rate increases have continued, especially for complex risk types like energy, financial institutions, fintech, utilities, technology, education, and healthcare. While increases apply across-the-board, factors such as cybersecurity maturity and evidence of robust security controls have been key differentiators in determining the amount of rate increase.
Capacity (Constrained) Local capacity has been limited but global capacity (of local insurers) and reinsurance capacity has been available to meet the needs of the market.
Underwriting (Rigorous) Underwriting has been stringent and rigorous. Evidence of proper security controls has been critical. There has been minimal flexibility on requests for custom coverages. Extensive underwriting information has been required, and the process has been slow.
Limits (Flat) Expiring limits and sub-limits were generally flat. Business Interruption, Cyber Extortion, and Crisis Management coverages have typically been sub-limited at 50%.
Deductibles (Increased) According to the general market philosophy, Cyber coverage is intended primarily for large events and losses. As a result, insurers continued to manage deductibles upward, including waiting periods and coinsurance for ransomware and business Interruption. However, “assistance coverages” such as reputational expenses, notification, monitoring, and defense expenses were provided in some cases with no (or a low) deductible.
Coverages (More Restrictive) Coverage has continued to contract, especially for Ransomware coverage, Business Interruption, Physical Damage, and Funds, Money, and Securities.
A Look Ahead (Challenging) Current, challenging market conditions are expected to continue. New insurers entering this space will bring additional capacity and may enter at a more favorable price structure as they are not working to overcome the losses of the past few years when risks, underwriting, and pricing were less mature.
Q1 Property Summary
Overall (Moderate)
Following a prolonged period of challenging conditions, the market has moderated somewhat. While adjustments on rates and terms have continued, they have not been as severe.
Pricing (+1-10%)
Rate increases have remained the norm, but most were modest except where required risk protection measures had not been implemented.
Capacity (Ample) Capacity has been available and sufficient for most risks; however, challenging industries like plastics, textiles, pulp and paper, chemical, pharmaceutical, power and energy have been experiencing constraints. Sabotage and terrorism has continued to be constrained regardless of industry.
Underwriting (Prudent) Underwriters have been cautious, especially related to sabotage and terrorism (as a result of recent and ongoing civil unrest and considering the upcoming governmental elections) and risks subject to severe weather. Scrutiny has been high for risks where risk control investments have decreased during the pandemic.
Limits (Flat) Expiring limits were achieved in most cases, with the exception of Sabotage and Terrorism, where limit reductions were often imposed.
Deductibles (Increased) Deductible increases have been mandated for Sabotage and Terrorism, Earthquake, and other natural catastrophe risks.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Moderate) The moderation trend is expected to continue across pricing and coverage terms with the key exception of Sabotage and Terrorism coverage, where further capacity reductions and price and deductible increases are expected to continue.
Q1 Casualty/Liability Summary
Overall (Challenging)
As a result of recent poor portfolio performance driven by loss severity, market conditions have been challenging. This has been evidenced by a limited market (very few insurers writing this line), and, for insurers that remained, a withdrawal of capacity – coupled with limited appetite – for higher hazard risks. Reinsurance support was often needed to complete placements.
Pricing (+1-10%)
Insurers have focused on returning to profitability and have imposed rate increases accordingly.
Capacity (Constrained) Due to limited local underwriting authority, local capacity has been constrained; however, facultative reinsurance was generally available to fill capacity gaps.
Underwriting (Rigorous) Quality underwriting information has been important for commanding insurer attention and interest. Due to limited local underwriting authority, referrals to regional or global teams have become common. Reinsurers have played an important role in providing solutions where local appetite and capacity has been limited.
Limits (Flat) The current pricing environment has precipitated the need for many insureds to explore limits options.
Deductibles (Flat) Risks with low loss frequency have generally experienced “as is” deductibles at renewal; however, higher risks like energy, power and facilities, have experienced deductible increases, driven by poor claims performance, the long-tail nature of claims, and insurer preference for excess layers (leading primary insurers to require larger deductibles).
Coverages (Stable) Coverages have generally been stable, although COVID and Silent Cyber exclusions continued to be required. Reinsurers have been reluctant to include custom clauses that differ widely from traditional forms.
A Look Ahead (Challenging) Insurer focus on profitability is expected to continue. As a result, rate increases, constrained local capacity, and referral underwriting are expected to continue. Reinsurance will continue to fulfill an important role. Quality underwriting information will become even more important to command insurer attention and interest..
Q1 Directors and Officers Summary
Overall (Challenging)
Market conditions have remained challenging, evidenced by a limited market (very few insurers writing this line), and, for insurers that have remained, a withdrawal of capacity for out-of-appetite risk types. Insurers have been highly selective and minimizing US exposed risk (Side C) as litigation has remained a key consideration, and the impacts of COVID were deemed to have not fully played out. Reinsurance support has been commonly needed to complete placements.
Pricing (>+30%)
Pricing has remained pressured, although increases have decelerated from 2020 and 2021. Deductible and coinsurance increases have helped to temper rate adjustments. Financial institutions, government, construction, and oil and gas have been experiencing the most significant impacts.
Capacity (Constrained) Available capacity has been constrained due to the withdrawal of capacity for challenging risk types.
Underwriting (Rigorous) Underwriters have very little authority; most risks have been referred to regional or global teams. Underwriting has been stringent, and financial information has been scrutinized, which delays the process. Questions related to ESG have become more common, as have supplemental questionnaires as well as underwriting calls between Aon, the insurer and the insured.
Limits (Decreased) The current pricing environment has precipitated the need for many insureds to explore limits options. While many insureds have sought higher limits, most consider them cost-prohibitive.
Deductibles (Increased) Side C deductibles for risks with US exposure have continued to increase.
Coverages (More Restrictive) Some insurers have restricted coverage by limiting the definition of systemic risk to specific events.
A Look Ahead (Challenging) Current market conditions are expected to continue in the short run, until new capacity enters the market, and pricing plateaus. Insureds with exposure to the local regulator, Contraloria, will continue to face challenges as underwriters will remain cautious on these risks. Presidential elections later in the year may trigger some volatility.
Q1 Trade Credit Summary
Overall (Moderate)
The market stabilization trend has continued, following a period of challenging market conditions that arose during the pandemic. While the market could not be described as soft, conditions have generally been moderate across pricing, underwriting and coverage terms.
Pricing (Flat)
Following price adjustments that were implemented during the pandemic, rates have now stabilized. Expiring pricing was achieved in most cases.
Capacity (Ample) Capacity positions have differed widely based on the underwriting policies of each insurer; however, there has generally been sufficient capacity available in the market.
Underwriting (Flexible) Underwriting has been flexible and insurers have been considering risks previously declined.
Limits (Flat) Exposures have been stable and additional limits have not generally been sought. Expiring limits were achieved inmost cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Moderate) Stable market conditions are expected to continue, although uncertainty is growing surrounding the potential for widespread economic and financial impacts related to the geopolitical events in Eastern Europe. Underwriters are also watching carefully for potential impacts related to the upcoming presidential elections.
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