Q2 Regional Insights

North America

Overall, market conditions continued to moderate, with modest price increases across most products and risk types, driven by improved insurer performance as well as the mobilization of new capacity and fierce competition by incumbent insurers seeking to maintain their portfolios.
Despite continued moderation of rate increases, exposure increases drove premiums higher. Key factors impacting exposures included inflation, continued scrutiny of property valuations, and ongoing labor and supply chain challenges which continued to drive up costs and extend recovery periods.
Insurer focus on profitability remained evident in underwriting practices, which continued to be disciplined and attentive to well-performing risk selection. Social inflation and disruptions to the global supply chain continued to be key underwriting priorities.
Despite ongoing claims frequency and severity, the Cyber landscape experienced a modest deceleration but remained challenged. Systemic, correlated risks and aggregate impacts continued to be a key concern for insurers

The market continued to gradually stabilize; however, economic concerns related to rising inflation both in Latin America and the US, coupled with political concerns related to the presidential elections, tempered insurer optimism.
Insurers have become increasingly focused on Environmental, Social and Governance (ESG), which continued to impact underwriting strategies and behaviors.
Local insurers have pointed to potential changes in their capacity, terms and conditions as a result of the July 1st treaty renewals.

The myriad direct and indirect impacts of the unfolding geopolitical events in Eastern Europe were profound. Rising commodity prices fueled inflationary pressures, decreased demand dampened global trading, and global supply chains suffered further disruptions. The insurance market response included mandating additional coverage restrictions related to geopolitical events and continued rate increases, although they were more moderate.
Overall market capacity expanded as new specialty players and MGAs entered the market.
Cyber continued to be the most challenging line of business, experiencing a further reduction in capacity, an increase in pricing, and the application of exclusions.
Underinsurance has emerged as an area of insurer concern as inflation pressured exposure values and claims costs.

Claims inflation continued to dominate insurer discussions with the focus pivoting from longer tail lines to all areas of risk transfer with significant escalations in rebuild cost and delays.
While some insurers continued to retreat from longer tail products, there was a growing recognition in the market that higher interest rates would lessen the reliance on underwriting profit for the first time in over a decade.
Insurer focus on weather patterns and the effect of climate change heightened after record recent rainfall and flooding. The financial impacts of these natural catastrophes were worsened by underinsurance and re-build delays due to lack of labor and materials.
With ever more centralized underwriting authority, the disconnect between decision makers and the local risk landscape widened. The impact was a higher number of rejections, underwriting referrals, and often more restrictive terms from global insurers when compared to their domestic counterparts.
The Australia Cyclone Reinsurance Pool became effective for SME organizations on 1 July 2022. While designed to assist pricing for Personal Lines clients, impacts on larger organizations are expected to be far-reaching as insurers potentially lose economies of scale and need to adapt treaty protection.