Geography Trends Q1 EMEA and the UK

Germany

Market Dynamics

Q1 Automobile Summary

Overall (Moderate)

The market remained moderately favorable, with the key exception of poor performing and/or difficult risk types which experienced more challenging conditions.

Pricing (Flat)

Pricing remained stable despite a post-pandemic increase in exposures and losses, which have not negatively impacted underwriting behaviors and pricing.

Capacity (Ample) Capacity was sufficient for most risks; however, heavy risks such as CEP vehicles and car rentals experienced limited appetite and capacity.

Underwriting (Flexible) Underwriters demonstrated greater flexibility, especially for well-performing risks, and some offered multi-year contracts.

Limits (Flat) Expiring limits were achieved in most cases.

Deductibles (Increased) Expiring deductibles were achieved for smaller fleets; however, deductible increases have become common for larger fleets.

Coverages (Stable) Auto risks continued to become more technology-driven and complex, and as a result, insureds have increasingly sought more flexible and innovative coverages. Insurer product offerings have not kept pace with advances in the auto industry, leaving some risks in challenging coverage positions.

A Look Ahead (Moderate) Courier trip activity is increasing, leading to a rise in Liability claims. This will continue to be an area of focus for insurers.

Q1 Cyber Summary

Overall (Challenging)

Market conditions remained challenging. Rate increases continued but have decelerated. Underwriting requirements increased significantly and were onerous for insureds. Insurers were increasingly concerned over potential risks associated with events in Eastern Europe.

Pricing (+11-30%)

Rate increases varied by risk size and complexity, with smaller risks experiencing moderate increases while multinationals experienced severe – sometimes triple-digit – increases.

Capacity (Constrained) Capacity was constrained, as appetite for lead capacity and high Excess capacity remained very limited.

Underwriting (Rigorous) The underwriting environment was challenging as insurer information demands continued to increase and underwriting guidelines were strictly adhered to, with virtually no flexibility.

Limits (Decreased) Limit decreases were mandated in response to rising loss costs and underwriter focus on limiting per-risk exposure.

Deductibles (Increased) Due to changes in attack vectors over the past three years, frequency losses have become more prevalent. As a result, insurers have required substantial deductibles/self-retentions, especially for larger companies.

Coverages (More Restrictive) Most insurers have undertaken ransomware risk evaluations which has led to a contraction of Ransomware coverage. In addition, new temporary restrictions such as "Log4Share“, territory adjustments, and war exclusions have been introduced.

A Look Ahead (Challenging) Market conditions will remain somewhat challenged, but are likely to stabilize as previously implemented changes to underwriting and pricing settle in.

Q1 Property Summary

Overall (Challenging)

Significant flood losses in mid-2021 impacted the Q1, 2022 market conditions, leading to increased underwriting and pricing conservatism.

Pricing (+1-10%)

Modest rate increases continued across the market at large; however, global risks experienced a slight stabilization.

Capacity (Ample) Capacity was generally stable, despite a trend amongst insurers to re-evaluate their CAT capacity and implement capacity management strategies following last year’s Germany flood losses and events in other countries. While local capacity was insufficient for some industries, international market capacity was generally available to fill any gaps.

Underwriting (Rigorous) The underwriting environment was rigorous and stringent, especially, for higher risk, loss-prone industries. Robust, detailed underwriting information was required.

Limits (Flat) Expiring limits were achieved in most cases; however, decreases in insurer line sizes has meant more layers and coinsurance.

Deductibles (Increased) Deductible increases were identified as an important instrument for relieving claims ratios, especially given that large price increases are often difficult for insurers to achieve.

Coverages (Stable) Expiring coverages were achieved in most cases.

A Look Ahead (Challenging) Current market conditions are expected to continue and may slightly deteriorate as the full impact of the 2021 flood losses on loss ratios settles out.

Q1 Casualty/Liability Summary

Overall (Moderate)

Appetite was strong and market conditions were favorable for mid-sized risks with moderate-to-low complexity. Large and complex risks experienced more moderate conditions wherein insurers were more conservative in their pricing and terms offered.

Pricing (+11-30%)

Significant price increases continued in Q1, especially for large and complex risks. Some insurers referenced general inflation as a driver of rate increases.

Capacity (Ample) Capacity was stable and generally available for most risk types despite de-risking and line re-sizing across some insurers.

Underwriting (Rigorous) Underwriting was stringent – especially for poor-performing industries. Product Recall and Product Liability experienced the most challenging underwriting environment. Insurers offered coverage for new Liability business only if the risk type aligns with their strategy and appetite. Quality underwriting information remained key.

Limits (Flat) Expiring limits were achieved on most placements.

Deductibles (Increased) Some industries and coverages have become subject to minimum deductibles and therefore experienced mandatory deductible increases to meet insurer requirements. In some cases, insureds have chosen to increase their deductibles as a mechanism for reducing premium increases.

Coverages (Stable) Terms and conditions were generally stable; however, insurers conducted coverage reviews for complex risks. Cyber exclusions were introduced by some insurers.

A Look Ahead (Moderate) For large and complex risks, current market conditions – including insurer coverage and capacity reviews – are expected to continue. For mid-sized risks with moderate-to-low complexity insurer appetite will remain strong as insurers seek growth in this space. Underwriting scrutiny is expected to intensify as risks related to the geopolitical events in Eastern Europe emerge.

Q1 Directors and Officers Summary

Overall (Challenging)

Market conditions remained challenging but have moderated somewhat, despite uncertainty stemming from ongoing COVID impacts as well as concern related to the potential impacts of the current geopolitical events in Eastern Europe. Underwriting remained conservative, and underwriting scrutiny remained high. New coverage restrictions related to geopolitical risks were imposed.

Pricing (+11-30%)

Price increases continued; however, they moderated somewhat from 2021

Capacity (Ample) While capacity was generally sufficient for most risks, maximum capacities have been markedly reduced.

Underwriting (Prudent) Appetite for new business has expanded slightly and long-term agreements are being offered on a limited basis. Underwriting scrutiny; however, remained high, especially for COVID-impacted sectors, SPACs, and US-listed companies.

Limits (Flat) While existing limits were achieved in most cases, insurers were very cautious in deploying limit.

Deductibles (Flat) Following Side C deductible adjustments that were mandated in recent years, expiring deductibles were achieved in most cases in Q1.

Coverages (Stable) Insurers have begun imposing coverage clarifications and restrictions related to geopolitical concerns.

A Look Ahead (Moderate) Many insurers are signaling a strengthening of risk appetite and a limited few are even offering long-term agreements in some limited cases, despite uncertainty stemming from ongoing COVID impacts as well as concern related to the potential impacts of the current geopolitical events in Eastern Europe.

Q1 Trade Credit Summary

Overall (Challenging)

Inflation increased the need for capacity and elevated the insolvency risk while social and political volatility increased insurer uncertainty. These conditions led to moderately challenging market conditions, with modest rate increases and stringent underwriting practices.

Pricing (+1-10%)

Low loss ratios, combined with a low cost of capital, has resulted in price decreases to pre-COVID levels. However, German export and import markets were under pressure in Q1, which insurers watched carefully for potential signs of an increase in claims activity, which could ultimately impact pricing.

Capacity (Ample) Capacity was generally sufficient. Additional capacity, when needed, was provided by specialty insurers.

Underwriting (Prudent) Underwriters have become more rigorous and stringent, driven largely by supply chain challenges as well as growing uncertainty related to the geopolitical events in Eastern Europe. High risk industries and poor performing risks experienced the most challenging underwriting conditions.

Limits (Flat) Expiring limits were achieved in most cases.

Deductibles (Increased) Deductible increases were common as a mechanism for insureds to secure more favorable pricing.

Coverages (Stable) Expiring coverages were achieved in most cases.

A Look Ahead (Challenging) The development of the Trade Credit market will depend largely on the economic impacts of the geopolitical events in Eastern Europe and the number and severity of claims arising therefrom. Limits and coverages will be closely monitored, particularly for vulnerable sectors.

Iberia Market Dynamics

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