Geography Trends Q2 EMEA and the UK

United Kingdom

Market Dynamics

Q2 Automobile Summary

Overall (Moderate)

Driven by healthy competition and appetite, market conditions remained stable and modestly favorable in Q2.

Pricing (+1-10%)

Price increases continued from Q1 but were dampened by competitive forces.

Capacity (Ample) Market capacity remained sufficient.

Underwriting (Flexible) Insurers continued to innovate and accommodate to attract and retain risks. Telematics and other risk management innovations continued to play a bigger role in underwriting.

Limits (Flat) Expiring limits were achieved in most cases.

Deductibles (Flat) Expiring deductibles were achieved in most cases, with the key exception of distressed risks.

Coverages (Stable) Expiring coverages were achieved in most cases.

A Look Ahead (Moderate) Current market trends are expected to continue. However, the impacts of claims inflation are being closely monitored.

Q2 Cyber Summary

Overall (Challenging)

Geopolitical events in Eastern Europe created additional uncertainty and new complexity in an already challenged market, leading to continued rate increases, albeit slightly more moderate, and a further tightening of coverage related to systemic risk and war exclusions.

Pricing (>+30%)

Significant rate increases continued but moderated slightly.

Capacity (Constrained) The overall pool of risk transfer capital remained constrained as insurers continued to focus on limit deployment strategies; however, larger towers could generally be accommodated.

Underwriting (Rigorous) Insurers remained cautious, and underwriting was rigorous and stringent in Q2. Additional questions were added to ransomware supplementals. Underwriters provided only restricted cover, if any, if an insureds' cyber risk posture was deemed inadequate.

Limits (Decreased) Limits continued to decrease in Q2, particularly for smaller risks.

Deductibles (Flat) Recognizing the deductible adjustments that were made during recent renewal cycles, expiring deductibles could be achieved in most cases.

Coverages (More Restrictive) Coverages continued to tighten in Q2, particularly with regard to the geopolitical events in Eastern Europe. Insurers continue to minimize their systemic risk exposure.

A Look Ahead (Challenging) A challenging market environment is expected to continue, with perhaps a slight improvement in H2 2022 as the impacts of past adjustments to pricing, limits, deductibles and coverages gain traction.

Q2 Employers Liability/Workers Compensation Summary

Overall (Moderate)

Market conditions remained moderate, and competition was healthy for in-appetite risks. Evidence of a clear risk management strategy remained key to obtaining superior results. Inflation was a major underwriting concern.

Pricing (+1-10%)

Rate increases continued in Q2. Market competition served to dampen increases while inflationary concerns served to exacerbate them.

Capacity (Abundant) Appetite was healthy for Employers Liability coverage, leading to insurer portfolio expansion and abundant capacity.

Underwriting (Prudent) Insurers remained cautious in Q2, and evidence of risk management was essential to securing favorable terms.

Limits (Flat) Expiring limits were achieved in most cases.

Deductibles (Flat) Expiring deductibles were achieved in most cases.

Coverages (Stable) Coverages remained generally stable in Q2.

A Look Ahead (Moderate) Inflationary pressures and their potential impact on claims costs will be a key concern for insurers. Competitive market conditions are expected to continue.

Q2 Trade Credit Summary

Overall (Challenging)

Market conditions became more challenging in Q2, driven by ongoing supply chain challenges, inflationary pressures and uncertainty related to the geopolitical events in Eastern Europe.

Pricing (+11-30%)

Pricing experienced a material shift, with double-digit increases becoming common.

Capacity (Ample) Despite reduced appetite, capacity was generally sufficient to meet most client needs, although this was dependent on the risk country and transaction type. In general, credit risk experienced more favorable outcomes than political risk.

Underwriting (Prudent) Insurers leveraged a more rigid and rigorous underwriting approach and focused heavily on policy language. Product innovation has become a priority.

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 (Challenging) Demand for Trade Credit coverage is expected to continue to increase, even as appetite is expected to contract for risks in specific countries. Market conditions overall are expected to remain challenging.

Q2 Casualty/Liability Summary

Overall (Moderate)

Market conditions continued to moderate, showing a deceleration in the pace of increases. Inflationary pressures remain a key concern.

Pricing (+1-10%)

Price increases continued in Q2, driven primarily by the inflationary environment.

Capacity (Ample) Even as capacity management remained a key area of insurer focus, overall market capacity remained sufficient.

Underwriting (Prudent) Underwriting rigor and conservatism strengthened, and detailed information was required.

Limits (Flat) Expiring limits were achieved in most cases, although options were explored by insureds as a strategy to manage premium costs.

Deductibles (Flat) Expiring deductibles were achieved in most cases, although options were explored by insureds as a strategy to manage premium costs.

Coverages (Stable) New PFAS (per-and polyfluoroalkyl substances) exclusions were mandated.

A Look Ahead (Moderate) Insurer growth objectives are expected to create healthy market competition, tamping down further rate increases. These impacts may be tempered by inflationary pressures and resultant rising claims costs, as well as continued uncertainty related to the geopolitical events in Eastern Europe.

Q2 Directors and Officers Summary

Overall (Moderate)

Market conditions were moderate overall. Capacity was abundant, underwriters demonstrated greater flexibility, and rate decreases were common, driven largely by increased competition.

Pricing (Down)

Rates decreased in Q2 but not at the same pace as they had climbed during the hard market cycle. Price reductions were stimulated by increased competition, both in terms of new capacity (from insurers and MGAs) and a broadening of appetite from existing insurers, many of whom had reduced or completely withdrawn capacity during the pandemic.

Capacity (Abundant) Capacity was available for the majority of commercial sectors, with more limited capacity available on Primary placements while more abundant capacity was available in the Excess layers. Capacity per insurer remained somewhat suppressed for transaction-related placements and in challenging sectors with US-traded exposure (e.g., life sciences).

Underwriting (Flexible) Post-pandemic strategy adjustments, combined with market competition, led to improvements in insurer flexibility. Territory and sanctions-related exclusions remained points of discussion, driven by the geopolitical events in Eastern Europe.

Limits (Flat) With more moderate market pricing, there was additional interest from insureds to explore limit adequacy; however, most placements renewed in Q2 with expiring limits.

Deductibles (Flat) Expiring deductibles were achieved in most cases, although the deductibles for some risks that experienced extreme increases during the hard market are being re-evaluated.

Coverages (Broader) With increased competition, insurers were more amenable to coverage discussions.

A Look Ahead (Soft) Increased competition is expected to lead to a more favorable pricing and underwriting environment for insureds.

Q2 Property Summary

Overall (Moderate)

Driven by previous underwriting adjustments, improved insurer results and a focus on growth, the market continued to stabilize in Q2. Upward price adjustments continued, but the rate of increase decelerated. Though conditions improved in Q2, challenges remained for specific industry sectors (e.g., food, pulp and paper, and heavy industry), as well as loss-impacted risks.

Pricing (+1-10%)

As market competition remained healthy, rate increases generally eased, particularly where significant price increases had been imposed during recent renewals.

Capacity (Ample) Capacity was adequate for most client needs but remained highly disciplined and selective. This meant that for favorable risks, competition was healthy, capacity was abundant, and insureds had options. Capacity was available for more challenging risks but generally required more proactive planning.

Underwriting (Rigorous) While conditions continued to broadly stabilize, the underwriting discipline experienced over the last few renewal cycles continued. Referral underwriting has become less common as underwriting results have improved, and more authority has returned to local underwriters. The emergence of growth targets across a number of insurers is positively impacting underwriting decisions but this is being reserved for "in appetite" risks, dependent on industry sector, risk quality and the level of information provided. With underwriting discipline being largely maintained, it is imperative that insurers' demands around information and evidence of risk progression continue to be met. This is the clear route to securing the optimal response from insurers.

Limits (Flat) Expiring limits were achieved in most cases. A focus remained on certain aspects of coverage, such as Natural Catastrophe and Contingent Business Interruption, driven by several factors including recent losses and an accumulation of exposure for insurers. Engaging proactively with insurers and providing robust underwriting detail remained the best approach for achieving superior results.

Deductibles (Increased) An upward pressure on retention levels remained, although this subsided slightly as overall market conditions continued to stabilize. Further increases were required in some cases such as challenging perils, industry types and locations, as well as on loss-impacted programs.

Coverages (Stable) Coverage remained broadly stable, with a strong focus on areas such as Communicable Disease, Cyber, Denial of Access, Natural Catastrophe and Contingent Business Interruption. This was driven by various factors, including losses, reinsurance availability and insurer accumulations.

A Look Ahead (Moderate) Market conditions are expected to continue to stabilize in Q3, driven by growth plans from incumbent insurers and from new capital entering the market. The opposing force is inflationary pressure, which may in turn put pressure on pricing. Loss-impacted risk types will remain challenged. Maintaining proactive market engagement and addressing the information demands of insurers will remain critical to achieving superior outcomes.

Asia Pacific: Regional Market Dynamics

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