Automobile
Despite expectations of a challenging market environment, which had been driven by ongoing claims inflation and supply chain issues, the market was competitive and growth-focused. Lower risk profiles attracted the most favorable pricing and, in some cases, rate reductions were achieved. Capacity remained stable and broadly sufficient. Underwriting was sensible with most insurers preferring to write risks within appetite. Actuarial input played a larger role in non-conventional placements. Underwriters required greater lead time to evaluate risks and referral underwriting became more prevalent amongst some insurers. Deductible increases were explored with greater frequency – especially in the SME space – as a mechanism to offset premium increases. Some insurers began increasing windscreen deductibles due to rising repair / replacement costs stemming from technologies contained within them. Looking ahead, current market conditions are expected to continue.
Casualty/Liability
Market conditions were stable. Rate increases were proposed across-the-board, although they were tempered by healthy competition – especially for in-appetite risks – that was driven by insurer growth focus, new market entrants, and the continued movement of underwriters between insurers. While capacity was generally available, it remained limited for some complex risk types. Underwriting rigor strengthened as insurers continued to seek improvements in portfolio performance. Inflation, as well as US-exposed risk, remained key underwriting discussion themes. Insurers continued to exclude PFAS. Insurers applied risk specific underwriting (rather than a blanket approach) in the application of restrictions related to sanctioned territories. Looking ahead, current market conditions are expected to continue, with modest price increases and a spotlight on US-exposed or otherwise challenging risk types.
Cyber
Insurer focus shifted to profitable growth, generating significant competition and more options which resulted in improved placement outcomes, the extent of which varied by segment, sector, cyber security controls, and claims history. Large and complex risks experienced modest price reductions while smaller and mid-sized risks experienced a range of outcomes: risks with insufficient controls saw double digit increases while stronger risk controls led to more favorable pricing results. Capacity increased as new insurers entered the market. Local underwriters had more autonomy as compared to 2022, when referral underwriting / global sign-offs were required more frequently. Infrastructure exclusionary language continued to tighten and, although progress has been made toward transitioning to a more consistent approach for War and Cyber Operation exclusions – with LMA sign off still required – the transition continued to evolve. Although systemic risk remained a concern for insurers, particularly within the mid-market space, most insurers avoided sub-limits and opted instead to limit coverage through restrictive policy language. Looking ahead, with increased competition and insurer growth focus, market conditions are expected to continue to become more favorable; however, given the dynamic nature of the cyber threat landscape, a shift in losses would certainly impact this expectation.
Directors and Officers
Market conditions remained favorable as insurers competed fiercely to retain and grow their portfolios. Price decreases continued, the extent of which varied widely by sector, competition, and adjustments previously applied. Marked discounts could be achieved in many cases where the insurer had the opportunity to provide capacity elsewhere on the program / across lines of business. Capacity remained stable. Insurers were more open to discussing their maximum line size, although few increased their deployment. As insurers sought ways to add value and differentiate, underwriting became more flexible, and enhancements (e.g., in the form of deletion of exclusions) were common at 'first quote' stage and others could often be negotiated. Some clients who had reduced their limits in the hard market expressed interest in buying back to pre-pandemic levels. Peer analysis became even more important as clients sought to support their limit and deductible purchasing decisions. Looking ahead, current market conditions are expected to continue at least up until Q3, 2023 – a full renewal cycle past the initial market turn – barring further impacts from the recent challenges in the banking sector.
Marine
The Marine market varied from product to product. In the Liability space, the market remained somewhat challenging, with modest price increases, sufficient capacity, prudent underwriting, and “as is” coverages, limits and deductibles. Marine Cargo remained stable, with any potential softening being offset by rising reinsurance costs. Most risks renewed between flat and modestly up; however, risks with heavier Natural Catastrophe exposures experienced more significant increases driven largely by reinsurance. Capacity was sufficient and increased as new insurers entered the market; however, some risk types such as auto and retail continued to experience limitations on capacity. Deductibles remained stable although some clients opted to increase them to reduce premium spend. Underwriting discipline continued as respects coverage terms and conditions. Exclusions related to the events in Eastern Europe continued. The Marine P&I market remained moderate, with modest price increases, sufficient capacity and prudent underwriting. Marine Hull remained relatively stable. Pricing was generally flat. Small pricing reductions could be achieved when competition was introduced. Capacity increased as new insurers entered the market but it remained restricted for some vessel types where there was less market appetite (e.g., fishing vessels/RoRo passenger vessels). Underwriting was flexible for well-performing risks where tonnage is within appetite. Looking ahead, current market conditions are expected to continue.
Professional Indemnity
Increased competition driven by new market entrants and a general shift to a growth agenda helped to further moderate pricing and signal the return of a flat market in most Professional Lines classes, with rate adequacy remaining a key area of focus. Capacity levels increased and capacity was available to meet the needs of the vast majority of risks. Insurers remained wary about the macroeconomic outlook and inflationary environment; risks with crypto, "silent cyber", sanctions, fire safety and banking exposures were subject to increased underwriting rigor. Demand for limits remained relatively stable, although clients were mindful of inflation and the devaluation impact this may have over the longer-term. Insurers remained concerned about the potential inflationary impact on retentions. Clients tended to view the premium discount available from increased retentions as incommensurate with the level of additional client financial exposure. The war in Ukraine has heighted the focus and reliance on Sanctions and Territorial Clauses while The Building Safety Act 2022 has resulted in the introduction of Fire Safety Cladding Exclusions. Looking ahead, current market conditions are expected to continue.
Property
Modest price increases continued. Capacity was sufficient for most client needs, although Excess layers experienced some pressure. The two-tiered market continued, driven by a number of factors. New market entrants, growth targets and increased competition drove improved outcomes for “softer” occupancy, well-managed risks with quality underwriting information, while conditions remained challenging and unpredictable for tougher occupancy risks such as food, waste, heavy industry and energy, and risks with significant Natural Catastrophe exposures. Underwriting remained disciplined with demands around information remaining high, particularly where inflationary adjustments and evidence of risk quality, investment and progression were concerned. With the return of growth plans, the need for Head Office referrals decreased with more authority and decision-making now resting at the country level. Limits were broadly stable but the trend for clients to explore higher limits as a consequence of inflation increased, and higher limits were generally achievable. Natural Catastrophe deductibles were pressured. Coverage concerns continued related to Strikes Riot & Civil Commotion (SRCC), Natural Catastrophe (both primary and secondary perils, for the USA and Rest of World) and Contingent Business Interruption extensions, with greater scrutiny driven by treaty renewals, industry losses and insurer focus on accumulation of exposure. Looking ahead, current market conditions - including the two-tiered market - are expected to generally continue; however, there are certainly areas of challenge and unpredictability. Where new entrants are driving competition, results are likely to outperform the market average. However, challenges are expected to continue related to the impact of treaty results, natural catastrophe exposure, Excess layer pricing and heavier occupancies. Having a clear broking strategy, wide insurer engagement and superior risk information continue to be the recommended approach in mitigating their impact.
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