Automobile
Inflation and rising claims costs in 2022 pressured the Q1 market. Price increases continued. Appetite became more focused, although capacity remained abundant. Underwriting remained prudent and tended to be more rigorous and conservative for new business generally and for poor performing renewals. Limits and deductibles were stable, although risks with a high frequency of losses experienced upward deductible pressure. Looking ahead, inflation and rising costs will continue to pressure pricing upward. Underwriting discussions may become more strained as insurer appetite further focuses.
Casualty/Liability
Market conditions were modestly challenging and varied widely by sector, with oil and gas, chemicals, mining, auto parts and hospitality experiencing the most challenging conditions. Driven largely by inflation, moderate price increases were common. Capacity remained stable and was sufficient for most risks, with reinsurance and/or coinsurance leveraged for some challenging risk types. Underwriting remained disciplined but was more rigorous for risks in challenging sectors. Alternative limits and deductibles were explored to offset premium increases. Looking ahead, current market conditions are expected to continue; however, automotive parts manufacturers and environmental risks are expected to become more challenging due to regulations related to hydrocarbons.
Cyber
Challenging market conditions continued. Insurer appetite remained limited, but capacity was generally sufficient for most risks. Significant rate increases continued, driven by regional and global losses in recent years. Coinsurance or excess schemes were leveraged for most placements with limits greater than USD 5Million. Underwriting scrutiny intensified with strict analysis of technical information. Limit increases were explored – and generally available in the market – but were seldom implemented due to budget constraints. Deductible increases were common, and many insurers required coinsurance for Ransomware. First party coverage experienced coverage contraction and was sub-limited in some cases. Looking ahead, current market conditions are expected to continue.
Directors and Officers
The market transition that began in 2022 gained momentum, but conditions varied by risk type. Privately held firms experienced a favorable market, with generally soft pricing. Publicly held firms experienced a moderate market, with generally flat pricing. Challenging firms such as ADR II and ADR III experienced a more challenging market, with price increases. Competition strengthened amongst the major insurers, even as insurers remained focused on profitability. Local market capacity was abundant. Underwriting became more flexible and sub-limits for some key coverage extensions could be increased. Exclusions related to COVID-19 could, in some cases, be removed. Market conditions are expected to further improve, especially for in-appetite risks.
Marine
Driven by a significant increase in Cargo theft claims, market conditions became challenging, with significant price increases, especially for for poor performing risks. A large number of insurers participated in the market, and capacity was sufficient for most risks. Underwriting was stringent and rigorous. In some cases, increased security measures were mandated. Despite rising inflation, limits remained stable while rising losses drove up deductibles. Coverages remained stable with the key exception of Stock Throughput, which required support from reinsurers as it is no longer available in the local market. Looking ahead, a disciplined underwriting environment is expected to continue and insurers will remain focused on individual risk underwriting.
Professional Indemnity
The market remained moderate and varied widely dependent on risk type and activity. Modest price increases were common across the board, driven largely by inflation. Capacity was generally sufficient, with key exceptions such as lawyers and accountants, due to poor performance of these risk types. Coinsurance was common to achieve full tower limits. Underwriting was conservative and adhered strictly to underwriting guidelines. Referral underwriting was required for miscellaneous professional activities and restricted enterprises. New coverage language related to Cyber was introduced for Technology companies. Looking ahead, current market conditions are expected to continue, although insurers will keep a watchful eye on potential changes and opportunities associated with upcoming political elections in the country.
Property
Market conditions were challenging. Price increases continued, driven largely by inflation and reinsurance treaties. Insurers remained cautious in their capacity deployment and tended to reduce capacity at renewal, especially for risks lacking engineering reports. Proportional participation was leveraged as needed. Underwriting scrutiny remained strong, especially related to valuations, and detailed loss history and risk engineering reports were mandated. Well-performing CAT-exposed risks which previously experienced relatively favorable market conditions saw the most significant rate impacts due to pressure from reinsurance treaties. Limit increases were common, driven by inflation and rising loss costs. Strikes, Riots and Civil Commotion was commonly excluded, limited, or subject to a higher deductible. Looking ahead, current challenging market conditions are expected to continue.
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