Q1 Regional Insights

Asia-Pacific

At the time of writing, New Zealand weather events are estimated to have cost insurers in the region $2billion, putting additional strain on local natural catastrophe reinsurance treaties. The southern hemisphere summer was otherwise relatively benign.
Following the January 1st treaty renewals, insurers continued to review the impact of cost and retention changes across their portfolios, which were estimated to have a notable impact on combined ratios, driving continued scrutiny around Natural Catastrophe perils with a particular focus on unmodelled perils.
Despite pressured performance, insurers remained focused on retention and profitable growth, creating an interesting disconnect and driving further polarization of capital deployment. Notable examples included mid-sized and SME risks, as well as D&O placements, which saw a strong alignment of capacity, while Natural Catastrophe exposed risks and more challenging Liability and Professional Indemnity profiles remained significantly challenged.
Due to strained underwriting performance, many domestic insurers – especially those without a proper international business arm - have reduced their international capacity and shifted their appetite and focus toward local businesses and exposures with which they are more familiar.

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EMEA and the United Kingdom

Market conditions were generally moderate across most countries and products, with the notable exceptions of:

Property risks – especially Natural Catastrophe exposed – remained challenging as insurers sought to manage their exposure through selective capacity deployment and scrutiny of key areas of coverage.
As insurer performance improved, the D&O market further improved, with abundant capacity available in some countries, and pockets of price reductions.
After a prolonged period of challenging Cyber market conditions, the environment continued to moderate in Q1. While price increases remained the norm, they decelerated. Underwriting rigor and scrutiny; however, did not abate.
Appetite and competition for mid-market Casualty risks was healthy.
Pricing for US-exposed risks was challenging – especially for Auto Liability, Casualty and Property.

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Latin America

A challenging treaty renewal season sent waves across the market, resulting in upward pricing pressure, a refinement of appetite, targeted withdrawal of capacity, and some deductible mandates.
Social unrest in certain countries led to volatility, caution and conservatism in the Political Risk market.
The focus on risk quality and risk controls intensified, and detailed underwriting information – including descriptions of controls and complete loss history – was required to achieve superior renewal outcomes.

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North America

The remediation measures taken by insurers in recent years served to improve portfolio performance and create a more competitive environment, which gained momentum in Q1 as insurers focused on profitable growth. Despite a more favorable environment, underwriting remained disciplined (and based on individual risk profile), and insurers were strategic in their capacity deployment.
The Property market was very challenged in Q1 due to 2022 storm activity and surging reinsurance costs following the January 1 2023 reinsurance renewals, which were the most difficult in decades. The market was characterized by significant price increases, reduced capacity for Natural Catastrophe exposed risks, mandated coverage adjustments, including some related to indemnity periods and insured values, and renewals that came down to the wire due to delayed underwriting decisions.
Loss cost trends in Casualty and Professional lines remained a concern for underwriters as rate increases remained modest while loss costs trended significantly higher.
While publicly traded D&O was highly competitive at the outset of the year, the events involving Silicon Valley Bank (SVP), Signature Bank and Credit Suisse created a wave of caution as insurers questioned whether further weaknesses would materialize in the Financial Institutions sector or in other industries like technology.
Intermediaries were cautious and exercised heightened due diligence in the wake of the discovery of a situation where an Indiana-based MGU was binding business to a non-rated insurer after it lost its Lloyd’s capacity.

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