Pricing continued to moderate, with modest increases across most products and risk types, driven by improved insurer performance, the mobilization of new capacity and fierce competition by incumbent insurers seeking to maintain their portfolios. While rate increases were modest, overall premium increased more significantly due to growth in exposures and inflation.
Overall, capacity expanded in Q2 as capital from new providers became fully functional, and existing insurers mobilized to achieve their strategic growth targets. Capacity was sufficient in Q2 for most risk types with the most notable exception of Cyber coverage.
Underwriting scrutiny, rigor and discipline remained strong, particularly around risk controls and valuations, with a focus on products, industries and specific risks that have not performed well. Well managed risks with robust underwriting detail experienced flexibility and collaboration.
Inflationary pressures are increasing exposures and elevating verdicts/settlements, driving up coverage limits. In addition, some excess insurers are requiring higher primary limits.
While deductibles were generally stable, as exposures and losses began to rise due to inflation, insurers leveraged deductible increases on a case-by-case basis based on exposure growth, nature of risk, loss history and risk control.
Coverages remained stable with broader terms achieved in cases where insurers leveraged coverage as a differentiator. Terms and conditions continued to tighten in response to geopolitical events in Eastern Europe. Innovation related to ESG continued to emerge.