Automobile
Market conditions remained challenging, driven by continued impacts from COVID-19, product shortages, market closures in China, inflation and associated rising repair costs, and the geopolitical events in Eastern Europe. Capacity was sufficient but appetite narrowed for poor-performing risks. Underwriting became slightly more flexible as needed to retain business. As risks continued to become more technology-driven, insureds have increasingly sought more flexible and innovative coverages, and the market has responded. Looking ahead, market conditions are expected to remain challenging; however, insurers are expected to compete more aggressively.
Casualty/Liability
Market conditions remained favorable for mid-sized risks. Driven largely by inflation, larger and complex risks experienced more challenging conditions as insurers were more conservative in terms of pricing and terms offered. Capacity remained stable and was available for most risks despite de-risking and line re-sizing across certain insurers. The underwriting environment was generally stable, but challenging for Product Recall and Product Liability, and appetite guidelines were applied rigidly for all new risks. Coverages remained stable, even as insurers continued to conduct coverage reviews for complex risks. Looking ahead, current market conditions are expected to continue. Appetite will remain strong for mid-sized risks with low complexity, as insurers continue to seek growth in this space. Underwriting scrutiny is expected to intensify, particularly for large or complex risks.
Cyber
Market conditions remained challenging in Q3. Rate increases continued, but varied by risk size, complexity and attachment point. Risks with a lower IT maturity level faced substantially higher price increases than mature risks. Primary and low excess layers experienced significantly higher increases than high excess layers. Insurer appetite for high excess layers strengthened, although capacity remained constrained overall. Underwriting remained stringent and rigorous as information demands from insurers continued to increase. Insurers remained conservative, and there was little to no flexibility in underwriting. Large risks faced extreme deductible increases in some cases. Looking ahead, current market conditions are expected to continue.
Directors and Officers
Market conditions became more favorable as competition continued to increase. Flat to moderate price increases could be achieved for most well-performing risks while poor performing risks or those in less desirable sectors did not experience as much competition and were therefore subject to more significant price increases. Individual risk underwriting has become the norm; broad mandates were not generally applied. Insurers leveraged coverage terms as a differentiator. Looking ahead, inflation and geopolitical events in Eastern Europe will remain key underwriting concerns; however, competition is expected to further increase leading to further improvements in market conditions. Transparency in sharing risk information and a willingness to engage in risk dialogue will remain key factors for achieving superior outcomes.
Property
Market conditions remained moderate in Q3. Pricing remained modestly up for global risks while smaller and mid-sized risks experienced more significant rate increases. Local capacity was insufficient for some industries and risk types; however, international market capacity was generally available to fill any gaps. Insurer appetite strengthened but underwriters were prudent and required extensive information. Looking ahead, current market conditions are expected to continue.
Trade Credit
Market conditions remained stable despite the growing uncertainty regarding claims. The demand for working capital solutions, e.g. factoring, is growing due to rising costs for energy, etc. Capacity was constrained for some challenged risks. Underwriting was conservative, especially for risks in the energy sector. Flat pricing remained the norm, although reductions could be achieved for some well-performing risks. Looking ahead, as economic conditions remain challenging, insolvencies are expected to increase and as a result, underwriting may become more rigorous and stringent, and appetite may narrow.
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