Terence Williams
Chief Broking Officer, Commercial Risk Solutions, EMEA
“
Data is key, particularly around Property valuations, but also related to supply chains and secondary modifiers for Natural Catastrophe exposures. Pre-empting insurer requests will improve perception, underwriting accuracy and timelines.
Angela James
Chief Broking Officer, Commercial Risk Solutions, UK
“
The impending 1/1 treaty renewals look to bring challenge to certain lines of business with an anticipated focus on Property, especially Nat Cat exposures, Political Violence and SRCC and war lines. Carriers however are keen to grow which will bring an interesting dynamic to the marketplace so clients should look to differentiate themselves not only with accurate values and data but understand carrier partnerships and how they can best manage them in 2023.
Regional Overview
- Market conditions remained generally stable as insurers continued to focus on profitable growth and competition strengthened; however, insurers tended to be more conservative in anticipation of upcoming treaty renewals. Modest price increases continued, driven primarily by inflation. Insurers remained cautious as respects Cyber, War and COVID-19, as well as risks with Natural Catastrophe exposure.
- Captives and other non-traditional solutions – including top-up and excess of loss coverage – gained momentum as coverage restrictions and a general narrowing of terms continued, even despite rising prices.
- ESG continued to gain momentum and questions related to inclusion and diversity, cyber governance, energy transition and other developing ESG topics gained prominence in renewal discussions with underwriters.
Q4 Market Dynamics
Pricing (+1-10%)
Driven by sufficient capacity and a focus on end-of-year growth targets, the market experienced a continued moderation across most products; however, modest price increases continued due largely to inflationary pressures. Challenging risk types including trucking, mining and utilities, as well as Cyber placements (especially, in the Primary space), experienced a more challenging rate environment.
Capacity (Ample) Capacity remained sufficient for most products, coverages and risk types with the notable exceptions of Natural Catastrophe-exposed risks and Political Violence coverage. Capacity for Property coverage in Southern Europe and South Africa contracted materially for risks with material ESG considerations and in challenging industries. D&O capacity remained abundant as existing insurers sought growth and new insurers entered the market.
Underwriting (Prudent) Underwriting remained disciplined and thorough. Social and economic inflation dominated underwriter discussions. A two-tiered market continued, with preferred risks experiencing flexibility and favorable terms while less preferred products and risks – especially, Cyber, Russia/Ukraine exposure, and Auto – experienced a more rigorous, conservative and stringent environment. Insurers continued to innovate solutions and facilities to meet the changing needs of the market.
Limits (Increased) In a more competitive market, some insurers sought to increase their line sizes, although appetite remained low for extending maximum line size on a single placement. Valuation concerns remained a top priority, and insurers imposed Margin Clauses or values limitation clauses if values were insufficiently substantiated.
Deductibles (Flat) Deductibles remained flat across the portfolio with the notable exceptions of loss-impacted programs, Cyber and Casualty placements, and where risk quality progression was not evident. The trend to replace Combined Property Damage / Business Interruption deductibles with time element deductibles continued.
Coverages (Stable) Coverages remained stable, with limitations imposed for war, cyber, ransomware and infectious disease. While market conditions generally improved, insurer appetite for the reinstatement of “soft market clauses” remained limited.
Q4 Product Summary
Automobile (Moderate)
Pricing remained flat to modestly up and capacity was sufficient. Underwriting was rigorous, driven by the impacts of inflation as well as evolving risk profiles (e.g., e-bikes, EVs, EV charging infrastructure).
Casualty / Liability (Moderate) Stable market conditions continued but potential impacts of inflation and impending treaty renewals were key themes during underwriting discussions. European insurers significantly reduced capacity and increased deductibles for risks with US Casualty or US Auto exposure.
Cyber (Moderate) The Cyber landscape eased for most risks as competition increased in both the London and global marketplace due to new entrants and incumbent players deploying larger limits. However, insurers continued to scrutinize risk and restrict coverage where risk maturity or controls were deemed insufficient. Proactive risk assessments were key to engaging constructively with insurers.
Directors & Officers (Moderate) Across much of the region the market remained stable. Pricing was generally flat but decreases could be achieved in some cases. Competition increased and long-term agreements became more broadly available.
Property (Moderate) Mandatory reviews of sums insured became more common. Some parts of the region experienced more rigorous underwriting, and robust loss information was critical to achieving superior results. While the market was moderate overall, Natural Catastrophe-exposed risks experienced very challenging conditions.
Trade Credit (Soft) Potential impacts from the economic downturn gained prevalence in underwriting discussions. Insurers were generally cautious but flexible in offering new solutions such as top-ups to meet the growing demand for liquidity. Conditions in Iberia, The Netherlands and DACH were most favorable.
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