Automobile
Following poor portfolio performance in 2022, insurer cautiousness was elevated in Q1. Despite this, only modest price increases were achieved for most placements. Capacity was sufficient for most risks. Underwriting became less flexible, with little room for coverage enhancements. Incumbent insurers tended to be more flexible than non-incumbents. Looking ahead, current market conditions are expected to continue but may become more challenging as the further impacts of losses from 2022 are realized.
Casualty/Liability
Market conditions remained stable; however, inflation remained a key concern due to its impacts on the cost of claims and expenses. Modest price increases continued. Capacity constraints continued for pure financial loss, errors & omissions, product recall extensions and for US- and Canada-domiciled operations. Underwriting was selective for challenging risk types and poor performing risks, for which detailed underwriting information was often required. Limit increases were agreed on some well-performing, in-appetite risks. Coverage terms and conditions were stable, and broader coverages could be achieved in some cases. Looking ahead, the impact of inflation, interest rates and litigation rates will continue to dominate underwriting discussions; however, given that adjustments were already made at recent renewals, the need for additional adjustments will be diminished.
Cyber
A challenging market environment continued amidst ever-evolving threats; however, signs of a moderation continued to emerge. Price increases remained the norm, but past adjustments were taken into consideration when establishing the current level of increase. Capacity expanded as new insurers entered the market, although most new capacity was focused on excess layers. Underwriting was prudent for smaller, less complex risks but more stringent and rigorous for larger, complex risk types, and underwriting questions varied from insurer to insurer. Multi Factor Authentication compliance has become a minimum standard for insurers to provide indications. Coverages stabilized; however, there was a growing trend to exclude coverage for known vulnerabilities and outside service providers. Looking ahead, cautious optimism has returned to the market, though social inflation may drive pricing. Terms and conditions are expected to remain stable. New insurer-insured relationships will take time to develop as insurers build confidence with new risks and exposures.
Directors and Officers
The abundant availability of capacity has led to stable-to-soft market conditions, with flat pricing and flexible underwriting. Listed, higher-risk (e.g., crypto, fintech, SPAC, De-SPAC) or poor performing (e.g., unhealthy financials) risks experienced limited market appetite and greater underwriting and pricing conservatism. Flat limits and deductibles were achieved for most risks. Coverage was stable except exclusions were mandated for the events in Eastern Europe. Also, Financial Insolvency language was required where insureds faced headwinds on cashflow. Looking ahead, current market conditions are expected to continue with the notable exception of Financial Institutions / Financial Services risks, given the unfolding bank crisis.
Marine
Driven by local insurers’ portfolio retention goals, the cargo market was moderate to favorable, with many risks renewing at expiring pricing and terms. New opportunities were targeted with aggressive pricing. Coverages that were narrowed in recent years were expanded again. There was also a growing willingness to quote on risks which were previously out of appetite only a year or two ago. Underwriting authority shifted back to in-country underwriters who were keenly focused on profitable growth targets. As profitability remained a top priority, significant increases were not uncommon on poor performing risks, especially if they involved perils relating to static risk. Actuarial review remained mandatory for risks with premium levels above circa USD 1m. Limits and deductibles remained largely stable; however, there was slightly more flexibility compared to recent years with regard to Non-Catastrophe exposed storage deductibles. Looking ahead, current market conditions are expected to continue.
Professional Indemnity
Market conditions stabilized from the prior period of volatility, driven by a stabilization of economic conditions and the return of business operations / activity. Capacity increased for most sectors; while constraints persisted in the Construction and Property Valuers sectors. Underwriting was prudent for smaller, less complex risks while the environment was more flexible for larger risks and Special Project Professional Indemnity policies. “As is” coverages, limits and deductible were achieved for most risks. Looking ahead, a more conservative environment may be experienced as the impacts of social inflation and events in the banking sector further materialize. These factors may cast a more cautious revenue outlook for many sectors causing more prudent and conservative underwriting and pricing.
Property
Market conditions remained stable. Risks with strong loss control that were properly valued, loss-free and not Natural Catastrophe-exposed experienced near flat pricing and sufficient capacity while risks with Natural Catastrophe exposures or challenging loss history or risk profiles experienced significant rate increases, limited appetite, and reduced line sizes in some cases. Quality and timely underwriting submissions were key to obtaining superior terms and conditions. Expiring limits were achieved in most cases and increases were available, subject to insurer underwriting guidelines. Increased Natural Catastrophe limits were scrutinised and subject to insurer technical rate adequacy. Following adjustments made in recent years, coverages stabilized. Looking ahead, insurers will continue to focus on issues impacting profitability such as inflation, supply chain challenges, increased secondary-peril losses such as flood, wildfires, convective storms and hail, and the challenging reinsurance environment. Risks with strong risk controls, and a favorable loss history and risk profile will attract insurer interest and capacity.
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