Q4 Automobile Summary

Overall (Moderate)

Market conditions are stable, although claims inflation remains a challenge. Insurers continue to focus on rate strength, but this has generally amounted to only modest rate increases. Renewals are often agreed early. Competition is healthy for well-performing new business risks, and insurers are competing not only on price but also on other factors.

Pricing (+1-10%)

While increases are typically proposed by insurers, they can often be reduced to modest levels through negotiation.

Capacity (Ample) Appetite is strong as insurers look to grow in this space. As a result, capacity is sufficient. Tech insurers have become more prevalent in the market.

Underwriting (Flexible) Insurer growth goals are reflected in underwriting attitudes and behaviors, with most insurers demonstrating sensibility and doing what they can to retain or win business.

Deductibles (Flat) Broad mandates are not being applied; each risk is reviewed on its own merits. Expiring deductibles can be achieved in most cases.

Coverages (Stable) Coverage is statutorily determined and as such generally stable.

A Look Ahead (Challenging) Tech insurers may gain further traction, dependent on loss ratios, in the growing gig economy. Insurers are expected to continue to evolve their strategies around electric vehicles in commercial fleets.

Q4 Cyber Summary

Overall (Challenging)

Market conditions are very challenging. As ransomware incidents continue to increase, insurers are implementing more stringent underwriting approaches resulting in a reduction in available capacity.

Pricing (>+30%)

Rate increases are risk-specific based on claims history, cyber security risk posture, sector, segment and positioning of premium at last renewal. There are extreme variations in pricing outside of the average, particularly in the mid-market segment.

Capacity (Constrained) Due to the increase in severity of ransomware attacks and the resultant increases in claims costs, insurers are characterizing attachment points of under £30M as high risk, resulting in less capacity for both renewal and new business. It can be very challenging to find capacity for risks without sufficient cyber security controls.

Underwriting (Rigorous) The key drivers of past ransomware incidents, both in terms of frequency and severity, are being carefully reviewed as part of the underwriting process. This is resulting in a continued increase in underwriting questions and individual risk underwriting in all segments.

Limits (Decreasing) Insurers are managing their limits and continuing to reduce them, particularly in the mid-market and large corporate segments. Ransomware sub-limits and co-insurance restrictions are being applied in circumstances where the cyber risk posture is deemed inadequate. The Aon Client Treaty and the Aon Excess Cyber Facility are important tools in achieving requested limits.

Deductibles (Increasing) There is a continued increase in minimum deductible levels across segments with a clear insurer focus on larger retentions to drive positive action and better risk management.

Coverages (Restricting) Broad coverage remains available although it is being reduced based on individual risk factors. Business Interruption coverage, in some cases, is being restricted, with increased Waiting Periods and restrictions in System Failure coverage.

A Look Ahead (Challenging) A challenging marketplace is expected to continue, with price increases and restricted capacity. Insurers’ primary concern will be systemic risk and aggregation exposures / managing the impact of a single event on their portfolio. Insurers are expected to take further actions to manage this in 2022.

Q4 Employers Liability/Workers Compensation Summary

Overall (Challenging)

Market conditions are challenging as claims inflation continues to rise, insurers impose rate increases where possible, and COVID-related uncertainty continues.

Pricing (+1-10%)

Modest rate increases remain common and are based on individual risk characteristics such as risk management, risk retention strategies and loss experience.

Capacity (Ample) Capacity is sufficient for most placements – even the largest towers; however, some insurers are offering capacity only in conjunction with another line of coverage like Professional or Auto.

Underwriting (Rigorous) Underwriting is rigorous, and additional, detailed underwriting information is required, driven in some cases by reinsurer requirements. Robust underwriting information and insight is important to securing favorable placement outcomes.

Limits (Flat) Expiring limits can be achieved in most cases.

Deductibles (Flat) Deductibles are not common for this cover as it remains cost-effective to purchase ground up limits. Where deductibles do exist, they can be renewed at expiring levels.

Coverages (Stable) Coverage is largely driven by statute and remains stable.

A Look Ahead (Challenging) Current market conditions are expected to continue well into 2022 as strategies and budgets were established in advance.

Q4 Trade Credit Summary

Overall (Moderate)

Government measures to protect the economy have led to stable Trade Credit market conditions for most sectors with continued low levels of insolvency and related claims. However, insurers remain highly cautious as government measures taper off, and insolvency levels increase from their low base, with the travel and hospitality sectors, in particular, drawing a watchful eye.

Pricing (Flat)

Remediation that has taken place over the past two years - combined with current low loss activity - has precipitated a rate environment with minimal upward pressure.

Capacity (Ample) Appetite is stable and capacity is sufficient for most sectors.

Underwriting (Flexible) Underwriters, seeking profitable growth, are accommodating and pragmatic in their underwriting approaches.

Limits (Increasing) Credit limits have increased as underwriters look to support economic recovery, restocking efforts, and higher prices stemming from inflationary pressures.

Deductibles (Flat) The current low loss environment in terms of both frequency and severity has served to minimize upward pressure on risk share mechanisms.

Coverages (Broadening) Expanded coverages are available as underwriters consider options for achieving profitable growth.

A Look Ahead (Moderate) Barring any sudden economic shocks or surprises, stability is expected in the near term. The return of insolvencies as government support measures taper off, continued supply chain disruption, inflationary pressures and increases in costs of borrowing are expected to affect the market in the longer term.