Q2 Automobile Summary
Overall (Moderate)
Moderate market conditions continued in Q2, driven largely by increasing losses and associated loss costs.
Pricing (+11-30%)
Rate increases grew, driven by loss frequency and severity across the portfolio as well as supply chain disruption, which impacted incurred but not reported reserves.
Capacity (Ample) Capacity remained generally sufficient with the key exceptions of heavy vehicles, car rentals and passenger transportation risks.
Underwriting (Prudent) Underwriters were generally cautious, even on well-performing risks. Negotiations have tended to be slow and reliant on actuarial tools when available.
Limits (Flat) Expiring limits could be achieved in most cases.
Deductibles (Flat) Expiring deductibles could be achieved in most cases.
Coverages (Stable) Expiring terms and conditions could be achieved in most cases. A new usage-based product was introduced, but take-up remained low compared to traditional products.
A Look Ahead (Challenging) As insurers focus on profitability, more challenging market conditions are expected.
Q2 Cyber Summary
Overall (Challenging)
The Cyber market – including insurers and reinsurers – has remained challenging as rates continued to rise, capacity continued to contract, and ransomware risk remained volatile. Multi-Factor Authentication has become a very important underwriting requirement. The number of organizations seeking coverage has continued to grow.
Pricing (>+30%)
Rates continued to increase steeply, especially for complex risk types like energy, financial institutions, fintech, utilities, technology, education and health, and where controls were deemed insufficient.
Capacity (Constrained) Maximum local capacity is limited but can be supplemented with capacity from international (re)insurers to meet the needs of most risks.
Underwriting (Rigorous) Insurers tended to focus on specific segments – some writing smaller risks while others wrote larger, more complex risks. Underwriting was rigorous, especially for complex risks for which supplemental questionnaires were often required. The underwriting process could be slow and onerous, especially when reinsurers were involved.
Limits (Flat) Limits in the Cyber line remained flat. 100% of the limit was often available for third-party coverage, while business interruption, ransomware, cyber extortion and crisis management have been sub-limited.
Deductibles (Increased) According to the general market philosophy, Cyber coverage was intended primarily for large events and losses. As a result, insurers continued to manage deductibles upward, including waiting periods and coinsurance for ransomware and Business Interruption. However, "assistance coverages" such as reputational expenses, notification, monitoring and defense expenses were provided in some cases with no (or a low) deductible.
Coverages (Stable) Coverages have remained stable. It was difficult in some cases to find coverage for physical damage or for funds, money and securities. Insurers have also sought to limit coverage of systemic risks.
A Look Ahead (Challenging) Current, challenging market conditions are expected to continue. New insurers entering this space will bring additional capacity and may enter at a more favorable price structure as they are not working to overcome the losses of the past few years when risks, underwriting and pricing were less mature. Risk control is expected to play an increasingly important role in underwriting.
Q2 Property Summary
Overall (Moderate)
Market conditions continued to moderate in Q2, although adjustments in rates and terms continued.
Pricing (+1-10%)
Rates have increased, driven by the impact of inflation, social conflict and the elections in June which saw the country’s first leftist president come to power.
Capacity (Ample) Capacity has been available and sufficient for most risks; however, challenging industries like plastics, textiles, pulp and paper, chemical, pharmaceutical, power and energy have been experiencing constraints. Sabotage and terrorism has continued to be constrained regardless of industry.
Underwriting (Prudent) Underwriters – both local and reinsurers – have been cautious, especially related to sabotage and terrorism. Risk review is more rigorous, and underwriters are looking carefully at the implementation of loss control programs.
Limits (Flat) Expiring limits were achieved in most cases with the notable exception of coverage for sabotage and terrorism, which saw lower limits in the context of ongoing instability and political uncertainty.
Deductibles (Increased) Expiring deductibles were achieved in most cases, with the notable exceptions of sabotage and terrorism coverage, and programs that had not been materially increased at recent renewals which were adjusted to the market average.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Challenging) As uncertainty grows related to inflation, government changes and potential instability, insurers may become more conservative.
Q2 Casualty/Liability Summary
Overall (Challenging)
As a result of recent poor portfolio performance driven by loss severity, as well as technical reserve requirements (due to the long-tail nature of cover), market conditions have remained challenging. This has been evidenced by a limited market (very few insurers writing this line), and, for insurers that remained, a withdrawal of capacity, especially for higher hazard risks. Reinsurance support was often needed to complete placements.
Pricing (+11-30%)
Rates increased in Q2, driven by insurer profitability objectives.
Capacity (Constrained) Local capacity remained constrained; however, facultative reinsurance was often available to fill gaps as needed.
Underwriting (Rigorous) Due to limited local underwriting authority, referrals to regional or global teams have become common. Reinsurers have played an important role in providing solutions where local appetite and capacity has been limited.
Limits (Decreased) The current pricing environment has precipitated the need for many insureds to explore limits options.
Deductibles (Flat) Risks with low loss frequency have generally experienced "as is" deductibles at renewal; however, higher risks like energy, power and facilities have experienced deductible increases, driven by poor claims performance, the long-tail nature of claims, and insurer preference for excess layers; this has led primary insurers to require larger deductibles.
Coverages (More Restrictive) Terms and conditions tightened, especially for risks related to oil and gas, offshore activities, storage warehouses, and power and utilities.
A Look Ahead (Challenging) Insurer focus on profitability is expected to continue. As a result, rate increases, constrained local capacity and referral underwriting are expected to continue. Lack of insurer appetite for hazardous risks will likely remain the key issue, and reinsurance – despite its higher pricing – is expected to continue to play an important role in securing capacity for these risks.
Q2 Directors and Officers Summary
Overall (Challenging)
Market conditions have remained challenging, evidenced by a limited market (very few insurers writing this line), and, for insurers that have remained, a withdrawal of capacity for out-of-appetite risk types. Insurers have been highly selective and minimizing US exposed risk (Side C). Reinsurance support has been commonly needed to complete placements.
Pricing (>+30%)
Pricing remained challenged due to poor loss performance and rising technical reserves on long-tail claims.
Capacity (Constrained) Capacity was constrained largely due to limitations on local insurer authority.
Underwriting (Rigorous) Underwriters continued to have very little authority; most risks were referred to regional or global teams. Underwriting was stringent, and financial information was scrutinized, which tended to prolong the process. Insureds with exposure to the local regulator, Contraloría, faced challenges as underwriters remained cautious on these risks.
Limits (Flat) The current pricing environment has precipitated the need for many insureds to explore limits options. While many insureds have sought higher limits, most consider them cost-prohibitive.
Deductibles (Increased) Insurers prefer to cover large events and losses rather than high-frequency losses and related defense costs. As a result, deductible increases were imposed.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Challenging) Current market conditions are expected to continue in the short run, until new capacity enters the market, and pricing plateaus. Insureds with exposure to the local regulator, Contraloría, will continue to face challenges as underwriters will remain cautious on these risks.
Q2 Trade Credit Summary
Overall (Moderate)
Despite political uncertainty surrounding Colombia’s presidential elections in June, the market remained generally stable across pricing, underwriting and capacity.
Pricing (Flat)
Rates remained stable, although some insurers demonstrated pricing flexibility in areas well suited for their risk appetite.
Capacity (Ample) Q2 capacity remained stable and some insurers not previously writing in this space expressed an interest in expanding their appetite.
Underwriting (Prudent) Underwriting was generally prudent, with insurers showing preference for in-appetite risks.
Limits (Flat) Expiring limits were achieved in most cases.
Deductibles (Flat) Expiring deductibles were achieved in most cases.
Coverages (Stable) Expiring coverages were achieved in most cases.
A Look Ahead (Moderate) Insurers are watching the impact of the recent elections and may adjust their positions accordingly.
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