Terence Williams
Chief Broking Officer, Commercial Risk Solutions, EMEA
“
Pricing inconsistencies were evident in the results: pricing across a number of lines continued to increase, albeit muted, whilst other lines experienced dramatic reductions.
Angela James
Chief Broking Officer, Commercial Risk Solutions, UK
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Whilst market capacity generally remained ample and insurers sought growth, underwriting discipline continued. Aon continued to work with clients to develop thorough underwriting information and to differentiate their submissions in the marketplace
Regional Overview
- After a prolonged period of challenging market conditions characterized by high rates and restricted capacity, the Cyber and Directors & Officers markets moderated. D&O, in particular, improved materially, especially for mid-sized companies and financially well-positioned companies. The D&O market overall has become soft in Southern Europe.
- Increased frequency and value of claims continued to create challenges in the Automobile market, which was characterized by continued rate increases and underwriting scrutiny.
- Insurers remained focused on rating adequacy and exposure management on Critical Natural Catastrophe, particularly risks with exposures in the US.
- Multi-line programs became more common as insureds sought to improve efficiency and reduce insurance spend while insurers looked to broaden their relationships with clients.
Q2 Market Dynamics
Pricing (+1-10%)
Pricing was generally flat with the key exception of Automobile renewals which experienced rate increases. Across the rest of the portfolio, increases were generally inflationary or focused on risks with challenging profiles.
Capacity (Ample) Capacity was ample across-the-board. New insurers entered the Casualty market in Southern Europe, making the market more competitive than it had been in the past.
Underwriting (Prudent) Underwriting was prudent, with greater rigor applied to Cyber risks, where extensive underwriting information was required. In Southern Europe, insurers demonstrated flexibility and a willingness to negotiate, particularly on D&O risks.
Limits (Flat) Expiring limits were achieved in most cases. Increases to US Automobile Liability attachment points (for multinational clients) were mandated. In Iberia, the D&O market demonstrated more flexibility for increased limits.
Deductibles (Flat) Deductibles were generally flat, although there was increased focus on Automobile deductibles in Germany (due to tax reasons), and Construction Professional Indemnity deductibles in the Netherlands.
Coverages (Stable) Insurers scrutinized and, in some cases, restricted certain extensions, especially for challenging risks and industries. In Iberia, D&O coverages were broadened as insurers became more flexible. For Casualty, insurers remained focused on exposures such as PFAS, diacetyl, wildfire and repetitive head injury.
Q2 Product Summary
Automobile (Challenging)
Market conditions remained challenging, due to inflation-driven increases in repair costs which, together with increasing accident frequency, continued to escalate claims costs. Appetite narrowed as underwriters became more selective, including requiring extensive underwriting information. Well-performing, in-appetite risks experienced more moderate conditions.
Casualty / Liability (Moderate) The moderation of market conditions that began in 2022 continued in Q2 across most of the region, although insurers remained cautious, especially around risks with US exposure. Driven largely by aggressive insurer growth targets, in-appetite risks saw healthy competition and Long-Term Agreements could be achieved. Some new capacity entered the market while capacity restrictions driven by Head Office decisions and treaty reinsurance conditions were imposed in limited cases. Inflationary price increases continued, with larger increases imposed on larger risks. Insurer approaches on sanctioned territories remained inconsistent.
Cyber (Moderate) The landscape became more competitive as capacity increased from new market entrants and incumbent players deploying larger limits. At the same time, insurers continued to monitor their management of global aggregate capacity with concerns around systemic risk impact. Underwriting remained rigorous, with particular concern around biometric information, Operational Technology, Supply Chain Risk, and elevated risks related to geopolitical events in Eastern Europe. The trend to sublimit or require co-insurance for non-IT dependent business interruption/system failure grew, and some insurers discontinued offering this coverage.
Directors & Officers (Soft) Market conditions continued to improve. Competition was healthy as capacity increased, mostly through expanded line sizes. Price reductions were available and retention decreases could be achieved, especially on risks with no claims, as well as for larger risks with no US exposure. Limit increases and coverage enhancements were generally available. Long Term Agreements were revisited and Any One Claim limits were available for some risks. Underwriting discussions were dominated by ESG-related questions and concerns related to potential impacts of the economic downturn.
Marine (Moderate)
Market conditions varied based on risk profile, industry, insurer appetite and country. Across the board, moderate price increases were common. Conditions in the Cargo and Marine Liability market were relatively moderate. New capacity mobilized but remained limited in some cases such as automotive and retail risks. The Hull market experienced a disparity between the continent and London markets with continental Hull insurers remaining moderate while the London markets softened. New, highly specialized vessels have pushed the market boundaries on sum insured. Risks involved in the transportation of Electric Vehicles and Batteries experienced some capacity constraints. Exclusionary clauses were applied as required by reinsurance.
Professional Indemnity (Moderate)
Market conditions were generally moderate but showed signs of improvement in preferred classes. Poor performing and larger risks tended to experience challenging market conditions, with material price increases and capacity constraints.
Property (Moderate) The market was two-tiered, with limited appetite and significant price increases for difficult occupancies, Natural Catastrophe-exposed risks and poor-performing risks, while softer occupancies and well-performing risks experienced healthier insurer appetite and more moderate pricing. Capacity was generally sufficient for most risks. Underwriting remained focused on Natural Catastrophe and Contingent Business Interruption exposures.
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