Q1 Market Dynamics

Pricing

Ongoing inflation and rising loss costs – together with surging reinsurance pricing and contraction of reinsurance capacity – served to pressure pricing upward, though a strengthening of insurer profitability and pressure to achieve growth targets served to dampen increases and drive targeted decreases. Notable exceptions included Natural Catastrophe exposed Property, as well as higher-risk sectors, US-exposed risks (on non-US placements), and risks with adverse claims experience, which experienced increases that were in some cases significant.

Capacity

Capacity remained sufficient across most products and risk types and increased in some parts of the market. Notable exceptions – driven largely by reinsurance treaties – included Property, especially for risks with heavy Natural Catastrophe exposure, and risks with high hazard exposures.

Underwriting

Insurers remained focused on profitable growth and retention of well-performing risks and continued to expand their appetite in targeted areas. Underwriting was generally more flexible but remained disciplined and based on individual risk profile, controls and performance. The impacts of global inflation, combined with other factors, continued to drive up loss costs, and scrutiny of asset values and methodologies continued. Detailed information, even for well-managed and well-performing risks, was critical to achieving superior placement results.

Limits

Limits were pressured upward as inflation continued to increase exposures, as well as verdicts/settlements, and supply chain challenges impacted Business Interruption modelling. At the same time, changes to reinsurance treaties prompted some limit and sub-limit reductions (e.g., Natural Catastrophe sub-limits, particularly in lower attachment layers).

Deductibles

Deductibles remained generally stable despite insurer-proposed increases. Property placements – especially heavily Natural Catastrophe exposed risks – experienced mandatory increases and, in some cases, were transitioned to percentage deductibles. Increases were also required for some challenging risk types, poor performing risks, and risks deemed to have insufficient controls.

Coverages

Restrictions implemented in recent years were reconsidered in some cases, although the reinstatement of “soft market clauses” was limited. Following 1/1 treaty renewals, and as valuation concerns continued, Property terms and conditions faced ongoing pressure, especially where a clear valuation methodology was not evidenced. New Natural Catastrophe related restrictions were imposed for certain events. Insurers remained focused on limiting their Cyber exposure and continued to clarify Cyber-related coverage language. Exclusions related to the events in Eastern Europe remained.

Trends by Line of Business

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