Market Update from Broking Director Matthew Brunton

The January blues are over, and I sit here asking myself where did the month go, and where is the year already going?

During the end of 2023, we saw the market cycle transitioning from a harder to softer cycle and this has continued into 2024: some good news for our clients who have suffered the combination of rating correction and inflationary challenges over the last 12-18 months.

According to Marsh, the last quarter of 2023 saw insurers carry an average of a 1% rate and this is anticipated to continue in 2024.  Larger businesses are generally seeing flat to plus 5% increases, with core mid-market business starting to see reductions in places. We are starting to see insurers offering more longer-term agreements.

Alongside additional capacity rate inflation has also slowed considerably. In February 2023, we were seeing 13.82% and 17.36% for commercial and domestic buildings respectively, this level has now reduced to 1.90% and 5.40% for February 2024.

Naturally, we still have significant concerns around the level of underinsurance in the market and would urge our policyholders to undertake professional valuations to ensure the building sum insured is adequate.

The motor market continues to suffer with the challenges of inflation. Ernst & Young have predicted another year of loss leading activity in 2024, whilst economic inflation stands at 3.9%, figures do not reflect the challenges faced by the motor insurance industry.  The ABI have reported that motor cover was 25% more expensive on average across the whole of 2023, than in 2022.

My Motor Fleet Market update in October 23 provides the insight into market challenges.

In terms of markets, First Underwriting have now revisited their underwriting strategy to focus on Car and Van Fleets and ceased underwriting Haulage, Self-Drive Hire and Courier sectors.

As per our previous update, Covéa withdrew from the mid-market Fleet space (any fleet over 25 vehicles) – we are now seeing insurers applying double digit increases on claims free renewals.

In addition to this, we are witnessing the commercial marketplace impose terms on personally owned vehicles of directors to reflect the Personal Lines stance.

Marsh also published an increase in casualty rates averaging 2% in the final quarter to 2024. Employer Liability rates in the fourth quarter experienced a slight shift toward reductions, albeit insurers still have concerns and will push for rate increase where they can. This being said, there is continued insurer competition which will help mitigate rate increases.

Additional capacity has entered the market and is benefitting clients, many of whom have suffered since 2017.

Rate reductions are starting to occur, and we are seeing some insurers revert back to ‘any one claim’ options in the Design & Construct arena – it is important to check contractual conditions imposed on any client around the basis of the limit required.

We should still be cautious in respect of any higher risk professions and insurers still look to exclude Fire Safety Works, albeit some are now offering forms of rectification coverage, as opposed to blanket exclusion.

Directors & Officers (D&O) rates continue to decrease due to the increase in capacity. New capacity and increased competition have been seen in the market; for those with strong financials, savings could be available.

We are also seeing underwriters removing some of the restrictions imposed in the hard market with ‘any one claim’ coverage available for some risks.

Please continue to review the excess being applied to the Employment Practices Liability section – insurers are applying between £5,000-£10,000 on this tier of coverage.

The Cyber market has become less volatile, rate increases of between 2%-5% were seen in the last quarter of 2023.

Following implementation of a more risk managed approach, capacity has increased and insurers are now looking to grow their Cyber accounts during 2024

Mid to high net worth placement is becoming more and more problematic from a capacity and pricing perspective. During 2024 we will give greater focus to providing appropriate insight on the personal lines market.

Please watch out for the Webinar Wednesday schedule; we are focusing on a sector each month and have so far seen property insight, including Aviva’s insight into market conditions, an extensive overview of modern methods of construction and some expert advice on project policies.  More to follow and as always your feedback is welcomed.