Q2 Market Dynamics
Pricing
Upward pressure continued across most of the portfolio, although flat and decreased pricing could be achieved in areas targeted for insurer growth such as Directors & Officers, Cyber and well-performing, low-hazard risks. Property pricing remained volatile due to concerns related to inflation, rising reinsurance costs, climate change and Natural Catastrophe exposures. Auto pricing continued to increase due to adverse claims trends.
Capacity
Capacity remained sufficient across most products and risk types and increased in some parts of the market such as Directors & Officers and Cyber. Capacity for Natural Catastrophe-exposed Property risks was constrained – and expensive – driving greater use of alternative solutions including index-based products, self-insurance and captives.
Underwriting
Insurers remained focused on risk selection through disciplined underwriting supported by robust and detailed risk information. Property underwriters continued to scrutinize valuations and Natural Catastrophe exposures. Controls and security measures remained in the spotlight for Cyber risks. In-person underwriting meetings helped build relationships while virtual discussions remained a valuable and efficient approach for bringing experts to the table.
Limits
Limits were pressured upward as inflation continued to increase exposures, as well as verdicts/settlements. Natural Catastrophe sub-limits were scrutinized and reduced, particularly in lower attachment layers. Cyber limits could be increased in some cases; however, Ransomware limits experienced downward pressure. More layers / market participants were often required to achieve full tower limits.
Deductibles
While deductible options continued to be explored as a mechanism for reducing premium costs, deductible amounts remained generally stable with the notable exceptions of Property placements – especially those with heavy Natural Catastrophe exposure – as well as challenging risk types, poor performing risks, and risks deemed to have insufficient controls, which experienced upward pressure.
Coverages
Coverages remained stable and broader terms could be achieved in cases where insurers sought growth and used coverages as a differentiator. For example, broader terms could be achieved for Cyber, where cyber security maturity was demonstrated. Restrictions remained prevalent for Ransomware, Political Violence, and Strikes Riot and Civil Commotion. Property terms and conditions continued to tighten to address concerns related to valuations.
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