Q1 Automobile Summary
Overall (Moderate)
Although claims inflation remained a challenge in Q1, stable market conditions continued. Insurer appetite was healthy for well-performing risks. Early renewal engagement yielded superior placement results. Insurers competed on various competitive elements.
Pricing (+1-10%)
Price increases continued but were dampened by competitive forces. Some distressed risks experienced material increases, the extent of which varied based on the specifics of the risk profile.
Capacity (Ample) Capacity remained sufficient. A trend was observed for insurers to offer capacity to MGA's writing in different sectors.
Underwriting (Flexible) Insurers sought innovative ways to attract and retain risks and, in some cases, were open to considering risks outside of their core appetite. Telematics and other risk management innovations continued to play a bigger role in underwriting.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases, with the key exception of distressed risks. Deductible increases were sought by some insureds with well managed risks as a mechanism for reducing premium costs.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Moderate) The market is expected to expand through new insurtech entrants. Electric Vehicles will continue as a space to watch. Claims inflation is expected to continue to pose challenges and give rise to potential price increases.
Q1 Cyber Summary
Overall (Challenging)
Market conditions remained challenging, with the geopolitical events in Eastern Europe serving to exacerbate and complicate the landscape. Underwriting remained time-consuming and demanding; rate increases and capacity reductions continued.
Pricing (>+30%)
Despite price adjustments at past renewals, very significant rate increases continued.
Capacity (Constrained) The overall pool of risk transfer capital continued to decrease due to the global focus amongst insurers on reducing aggregate limits. This has been felt even more keenly at Lloyd's where some syndicates have been constrained on premium income growth through the business planning process.
Underwriting (Rigorous) Underwriting has become more rigorous and stringent than ever. Many underwriters are requiring evidence of risk improvement measures as a prerequisite to providing renewal quotes.
Limits (Decreased) Overall limits continued to decrease, and Ransomware sub-limits and co-insurance restrictions were applied in circumstances where the cyber risk posture was deemed by insurers as inadequate.
Deductibles (Increased) Deductible increases continued as insurers remained focused on transitioning away from ‘working layer’ losses, which has proven in the Cyber space to be a moving target.
Coverages (Stable) Expiring coverage terms were achieved in most cases, although coinsurance was required for risks where controls were deemed by insurers as inadequate.
A Look Ahead (Challenging) Current market conditions are expected to continue and may be further challenged depending on the impacts from the geopolitical events in Eastern Europe.
Q1 Employers Liability/Workers Compensation Summary
Overall (Moderate)
Despite ongoing challenges related to claims inflation, market conditions have stabilized. The market in the UK continued to be dominated by a few large insurers as appetite to write this cover on a standalone basis has decreased.
Pricing (+1-10%)
Following two cycles of material rate increase mandates, insurers have shifted to impose only modest increases.
Capacity (Ample) Capacity was sufficient in most cases.
Underwriting (Prudent) Underwriters demonstrated flexibility; however, robust underwriting information – particularly related to COVID related procedures and practices – was important to securing favorable placement outcomes.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases; however, options have been explored by clients seeking premium reductions.
Coverages (Stable) Driven largely by regulatory requirements, expiring coverages were achieved in most cases.
A Look Ahead (Moderate) An increased focus on inflation / the cost of living is expected as this could lead to claims escalation which could, in turn, impact rates.
Q1 Trade Credit Summary
Overall (Moderate)
Inflationary pressures and economic headwinds created by the tapering of COVID-related stimulus, combined with ongoing supply chain disruption, has elevated risk profiles. Due to this, as well as uncertainty related to the geopolitical events in Eastern Europe, the market environment has become slightly more conservative.
Pricing (Down)
Despite a slight shift toward a more conservative market, pricing was flat to slightly soft, driven by continued favorable portfolio performance.
Capacity (Ample) Capacity was stable and sufficient for most risks.
Underwriting (Flexible) Underwriters, seeking profitable growth, have been accommodating and pragmatic in their underwriting approaches, and generally able to satisfy client needs and requirements.
Limits (Increased) Credit limits have increased as underwriters looked to support economic recovery, restocking efforts, and higher prices stemming from inflationary pressures.
Deductibles (Flat) Deductibles have not experienced upward pressure as the loss environment has remained stable.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Moderate) A deceleration of economic growth linked to the ripple effects from the geopolitical events in Eastern Europe such as trade and supply chain challenges – combined with the high inflationary environment - may lead to more pronounced shifts in appetite and underwriting approaches.
Q1 Casualty/Liability Summary
Overall (Moderate)
Insurer focus has shifted toward growth, and competition drove a more moderate environment than was experienced in 2020 and 2021. Long term agreements have returned to the market, with terms up to three years.
Pricing (+1-10%)
Modest rate increases continued but have decreased from those seen in 2021.
Capacity (Ample) 2021 capacity management strategies have yielded a more moderate environment in 2022. Capacity has been generally sufficient based on demand.
Underwriting (Prudent) Following the rigorous underwriting reviews in 2020-21 underwriting stringency and rigor has moderated.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases. Where options to decrease the deductible were requested, they were generally available for an additional premium.
Coverages (Stable) With the introduction of coverage clarifications during recent renewal cycles, expiring coverage terms were achieved in most cases in Q1.
A Look Ahead (Moderate) Current market conditions are expected to continue but this outlook may change depending on the inflationary / economic impacts of the geopolitical events in Eastern Europe.
Q1 Directors and Officers Summary
Overall (Moderate)
As a result of new capacity entering the market and incumbent insurers expanding their appetite, overall market conditions have improved.
Pricing (+1-10%)
Price increases have decelerated for primary layers. Increased Limits Factors have eased for excess layers. Some rate reductions were achieved in high excess layers as a result of new capacity entering the market.
Capacity (Ample) Substantial new capacity has entered the market, which has pressured incumbent insurers who want to maintain their position. Many incumbent insurers have offered increased line sizes or have dropped down on certain placements.
Underwriting (Prudent) Following a prolonged period of portfolio remediation, insurer focus has shifted toward growth.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases.
Coverages (Stable) Coverage terms have stabilized and there has been a shift toward bolstering – rather than defending – terms.
A Look Ahead (Moderate) As insurers continue to focus on portfolio growth, appetite is expected to continue to expand, and market conditions may further improve. Insurers will keep a watchful eye on the developments and implications related to the geopolitical events in Eastern Europe.
Q1 Property Summary
Overall (Challenging)
Overall, rate increases continued although this has moderated, especially for risks which experienced price adjustments at recent renewals. Capacity has been sufficient for most risks, and over-subscription has become more common. Challenging conditions have persisted; however, for some industry sectors (e.g., parts of the food industry, waste and heavy trades), as well as for loss impacted programs, or where risk management and progression was not evident. Some insurers have become growth focused which, when coupled with new entrants looking to expand into this area, has helped to drive competition for "in appetite" segments. While conditions have moderated, maintaining the discipline of proactive market engagement, addressing the information demands of insurers and evidencing commitment to risk management still apply and remain the foundation of a successful market engagement strategy.
Pricing (+1-10%)
Rates have continued to rise; however, in general, the rate of increase has decelerated, especially for insureds which have had previous rate increases in the last few years. The larger increases were focused on specific areas of the market such as: risks exiting Long Term Agreements, certain industry sectors (food, waste and heavy trades), loss impacted programs and risks where risk management and progression was not evident. Minimizing costly layers on vertical programs has led to blended flat renewals.
Capacity (Ample) There was generally sufficient capacity to meet existing demand; however, insurers continued to exercise selectivity as to where they deployed their capacity. This has generated competition in some areas while in other areas, it remained very challenging to secure the level of limit that insureds requested. New insurers have been seeking to enter the market which is helping to offset capacity gaps.
Underwriting (Rigorous) Underwriters continued to be thorough in their reviews. The demand for information that has been a clear trend in the current hard market remained in Q1. This has been the key to unlocking capacity and outperforming against the general market stance. While central / head office underwriting strategies remained in place for most insurers, there was a growing level of autonomy granted at the country level. This has been especially evident where recent internal (insurer) strategies helped to deliver improved underwriting results.
Limits (Flat) In most areas, limits have remained stable through Q1; however, a focus remained on certain aspects of coverage such as Natural Catastrophe and Contingent Business Interruption. This was driven by several factors, including: losses emanating from these areas of cover, the reinsurance market stance and the accumulation of exposure for insurers. Pro-active engagement with insurers and addressing their information demands remained the best method of protecting or enhancing such limits.
Deductibles (Flat) An upward pressure on deductibles and retention levels remained; however, this was generally reserved for the more challenging areas of the market such as specific industry sectors or loss impacted programs, with previous adjustments in the other areas of the market deemed broadly sufficient for insurers. Deductible increases also continued as an option for insureds seeking to offset or minimize further price increases.
Coverages (Stable) The key areas of focus continued to include: Natural Catastrophe, Cyber, Contingent Business Interruption, various Business Interruption extensions and Communicable Disease cover. While there has been success in securing a consensus position in some of these areas, full uniformity across insurers remained a challenge. The reinsurance market and treaty renewal outcomes will continue to have an impact on the coverage stance taken by insurers throughout 2022.
A Look Ahead (Moderate) Market conditions are expected to continue to stabilize compared to previous years. Rate adjustments will remain but will be moderate relative to prior adjustments. Available capacity is expected to be sufficient for most risks. Specific industry sectors (such as elements of the food industry, waste and heavy trades), loss impacted programs, and risks where risk management and progression is not evident will continue to experience more challenging conditions, including more severe pricing correction and capacity restrictions. Maintaining the discipline of proactive market engagement, addressing the information demands of insurers and evidencing commitment to risk management will continue to apply and remain the way to outperforming the market for all clients.
©2022 Aon plc. All rights reserved | Contact Us | Privacy Policy | Legal