Q3 Trends by Line of Business
Automobile
Appetite was healthy for well-performing risks, and capacity was generally sufficient for most risks with the key exceptions of those with non-preferred, higher-risk exposures. Underwriters continued to carefully evaluate risk differentiation, including telematics and other vehicle safety and driver training initiatives. Inflation and supply chain challenges continued to impact loss costs.
Casualty/Liability
Market conditions remained stable. Rate increases continued but tended to be more modest where exposures had grown and performance was strong. Capacity was sufficient, although constraints were experienced for some risks (e.g., US exposure, environmental) and coverages (e.g., Product Recall).
Cyber
Market conditions continued to moderate in Q3 as appetite strengthened and new capacity entered the market. Price increases continued but decelerated – the extent of which varied by risk complexity, class of business, year-over-year improvement of controls and previous adjustments. Underwriting rigor remained high and keenly focused on minimum information and operational technology (IT/OT) security controls, with mature risks experiencing a more favorable underwriting environment.
Directors and Officers
Market conditions remained favorable. Expanded insurer appetite and competition in the primary space has provided more alternatives, while new capacity made an impact on excess layer ILFs and has pressured incumbent pricing. Risks in challenging sectors, or with governance or financial concerns or with a poor loss history, continued to experience more challenging market conditions. Underwriters were more flexible but remained rigorous and kept a watchful eye on the macro environment. ESG remained in focus for clients and insurers.
Property
Market conditions remained moderate, even in the aftermath of Hurricane Ian, which, by early estimates, may amount to a $50-70B insurance event. CAT-exposed risks and challenging occupancy types experienced continued upward pressure on pricing while flat pricing could be achieved for most preferred risks. A focus on valuations continued across the market; updated replacement cost valuations were mandated and many insurers sought an explanation of historical and current valuation approaches, and imposed coverage restrictions if replacement costs were deemed inadequate. While capacity was generally sufficient, some insurers reduced their line sizes due to the impact of valuations on overall portfolio exposures, and some higher hazard risks required more subscribers to complete. Underwriters scrutinized contingent business interruption exposures.
Trade Credit
Pandemic-related concerns continued to abate, although insurers remained watchful of potential impacts from high inflation and supply chain disruption. Market conditions were generally moderate, while in-appetite risks experienced a favorable environment. Insurer actions taken during recent past renewals were reconsidered.
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