Q1 Trends by Line of Business

Automobile

A confluence of factors such as inflationary pressure, supply chain challenges, rising accident frequency, increasing verdict amounts, and new automotive technologies served to increase loss costs and pressure pricing upward while competitive forces and the growing availability of Alternative Risk Transfer solutions served to dampen increases. While insurers leveraged flexible underwriting as a differentiator for in-appetite risks, underwriting remained generally prudent with a focus on fleet safety controls, driver training and driver selection. Insurer focus on ESG targets sharpened, impacting underwriting guidelines.

Casualty/Liability

A two-tiered market became more pronounced as preferred risks experienced a modestly favorable environment characterized by increased capacity, healthy competition and flat pricing while out-of-appetite risks (determined by industry, individual risk performance, presence of US exposures, and the need for reinsurance) often experienced limited appetite and material price increases. Topics such as claims inflation, large losses, and emerging risks such as PFAS and biometric privacy factored heavily into underwriting discussions, and policy clarifications were applied. Detailed and complete information remained key to achieving superior placement results and minimizing follow-up queries.

Cyber

Headwinds continued to subside as insurer loss ratios improved, confidence and appetite grew, and capacity continued to enter the market. Price increases generally decelerated, with risk differentiation remaining a key price driver. Underwriting remained rigorous, with extensive underwriting data documenting best-in-class network security and privacy controls required. Insurers continued to scrutinize coverage offered for critical infrastructure, systemic and/or correlated events, and war, with certain insurers restricting coverage on either a generalized or event specific basis. Lloyd’s insurers were required to implement an LMA-complaint cyber war exclusion.

Directors and Officers

The market transition that began in 2022 continued in Q1 2023. Improved rate adequacy served to strengthen insurer appetite, bringing new capacity into the market and improving competition. Underwriting remained focused on risk differentiation and emerging issues such as ESG, as well as the continued challenges associated with supply chains, inflation, cyber governance, and the potential impacts of recent banking failures. Risks falling within appetite experienced increased underwriting flexibility, including the reconsideration of coverage restrictions imposed during the hard market as insurers sought to differentiate based on coverage terms.

Marine

In the Cargo market, rising reinsurance costs and geopolitical concerns served to create moderately challenging conditions characterized by moderate price increases, a rigorous underwriting environment – especially related to Natural Catastrophe exposed risk, supply chain disruptions, aggregated values, and spoilage – and a refocusing of appetite. Capacity was generally sufficient, with some new capacity entering the market.

The Liability market was moderate; price increases remained modest, and capacity was generally sufficient. Social inflation remained a significant underwriting discussion theme.

The Hull market was stable, with pricing hovering near flat and reductions available in some cases, especially when competition was introduced. Capacity remained sufficient, with some constraints for large fleets and challenging vessel types. Underwriting was flexible for well-performing, in appetite risks.

The Logistics market was moderate. Capacity was stable, and generally sufficient. Insurers focused on profitability, but flat pricing could be achieved. Limit increases were commonly requested and generally available. Coverage restrictions related to virus, bacteria, and fungi, as well as events in Eastern Europe continued, and some insurers expanded their exclusion to all perils for shipments to/from and within Russia, Ukraine and Belarus.

Professional Indemnity

Competing forces had offsetting market impacts. While competition increased as insurers focused on profitable growth, insurer concern related to the economy, cyber risk, and the events in Eastern Europe created uncertainty and elevated conservatism. The outcome was a generally stable market – with Lawyers Professional and Accountants Professional risks experiencing moderate conditions while Consulting Professional and Construction Professional experienced a more challenging environment with some significant price increases. Capacity was generally sufficient for most risks but shifted in some markets – with new insurers entering while others reduced their lines.

Property

Following a complex and challenging treaty renewal season characterized by decision-making delays, significant rate increases, a notable pull-back of capacity, and mandatory coverage adjustments – especially related to indemnity periods and insured values (e.g., required margin, average, and coinsurance clauses) and Political Violence coverages – market conditions were strained in Q1, especially for Natural Catastrophe exposed risks. Adding to the challenges were the continued impacts of inflation, supply chain complexities, and the events in Eastern Europe. Targeted Natural Catastrophe limits were in some cases difficult to achieve (and expensive). Alternative program structures and solutions were important levers to achieving overall program goals. While well-performing local risks with nominal Natural Catastrophe exposure in desirable occupancy classes experienced healthy appetite and some increases in local underwriting authority, underwriting rigor remained strong across the portfolio, with complete and updated submissions – including loss reports, valuation methodology details, and responses to recommendations – required.

Regional Insights

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