As we enter October, the last quarter of the year, I ask myself where has the time gone!
We have had a fantastic year to date: some great growth in our written premium; developed stronger insurer relations; and we continue to attract quality colleagues across all divisions of the business.
I have put together a market overview for our most prominent classes of business.
As a brief recap from the last quarter of 2018, the market transitioned from a prolonged soft market and, by 2020, the hard market across most classes of business was being experienced. As the norm, (the majority of) insurers have now seen profits over the last two years, and good news for our clients is that competition has started to increase in the insurance market. Ahead of 2024, we are hearing of significant growth plans via a number of our insurer partners. We are hoping for autonomy to return to regional offices, with increased underwriting authority to reduce case referrals and improve efficiency, we can hope?
As alluded to at our annual conference, for the cases which would fall into the ‘grow’ segment for insurers (i.e. insureds with a good claims experience, low inception hazards and quality risk management), there will be plenty of capacity available – and likely competitive coverage and pricing will be provided. For those cases which consist of non-standard construction, poor claims experiences and less focus on risk management, there will be less insurer appetite.
For the higher risk property cases i.e. large exposures without sprinklers, there will be a need to rely on follow capacity to complete 100% of a client’s schedule: something our team can arrange for your client base.
From a renewal perspective, most insurers are still looking for rate, but currently the rate of inflation is exceeding the rate being carried for exposure. One thing to look out for is, of course, insurers’ reinsurance treaty renewals. A lot take place in January of each year, I would anticipate rate increases will apply and as such this will be passed via the market.
The liability market remains buoyant. Insurers do have some concerns around Employers Liability claims and will push for some increases, especially for construction cases. This will be heightened in line with inflation as loss ratios increase.
For the first time post-Grenfell, we are seeing additional capacity enter the market and increased competition between insurers – rate reductions are starting to occur and we are seeing some insurers revert back to any one claim options in the design and construct arena.
We should still be cautious in respect of any higher risk profession such as roofers, scaffolders, fire protection contractors, as insurers are still understandably nervous around the exposures – look out for policies restricting coverage to rectification only.
Financial concerns during and after COVID have now mostly allayed. We are seeing more rate reductions and there is additional entrants to the market, but also increased appetite to grow from those who exited or paused growth whilst remediating their book.
Keep an eye on deductibles being applied to Employment Practice Liability sections, as over 50% of claims are falling into this bracket of coverage and some insurers are applying between £5,000-£10,000 on this tier of coverage.
The cyber market has changed considerably. Insurers have now implemented a focused approach on risk management to ensure that underwriting profit is returned; a number of insurers are offering assistance in this arena with URL scans. I would urge you to recommend a Social Engineering policy to any client who is concerned around fraud as whilst there are extensions of coverage provided by insurers relating to e-theft, these are often small inner limits with conditions attaching.
One class which bucks the softening trend is Motor Insurance – I assume we have, or we are all, starting to receive our renewal invitations! As we know insurers are looking for rate increases, the challenges stem from COVID-19, the low road use resulted in increased profitability and competition between insurers resulted in lower rates. Post COVID, we are seeing increased claims frequency. In addition to this there are supply chain issues, which result in repair delays and thus increased credit hire costs. If we then add in modern technology and electric vehicles, insurers are battling to make money.
The above is highlighted with Covéa withdrawing from the mid-market fleet space (any fleet over 25 vehicles) and Markerstudy pausing writing new business.
We should be aware of dual pricing in the market, very much like the two tier Property/Business Interruption class, rating pressure on insurers’ existing portfolios isn’t leading to a lack of competitiveness on new enquiries.
Mid to high net worth capacity has reduced in the last 12 months. We have seen the sad demise of Home & Legacy, and AxaXL & Azur acquired by Aviva, insurers are pushing for premium and reviewing policy inner limits. In order to assist, we are delighted to confirm that we have added both Hoxton (Lloyd’s capacity) and Protect Underwriting (Hiscox capacity), to our panel to assist in ensuring we provide competitive mid to high net worth solutions.
The motor market challenges are in line with our general motor update, insurers are looking to package high net worth fleets with the household. Range Rovers, as per our update earlier this year, remain a challenge to insure in isolation, especially in London.
A more general item would be under insurance which continues to be a challenge for both commercial and residential property. We have great relationships with both RCA and BCH who can provide desktop valuations for the majority of our client base which will help them sleep easier in the event of a loss. If you need any further details please visit the Hub and/or ask the team. In summary, we are exiting the hard cycle and entering the softer cycle. As always if you would like to discuss anything further, please have a chat with your placement team and they will provide further insight.
As always thank you to our broker partners for all of their efforts throughout the year, and here’s to an even more successful 2024.