London market update - Part II
As we reported in our mid-January Market update a combination of events including NAT CAT losses, global conflict, inflation, trapped capital and attritional losses in certain classes all combined to make the January 1 2023 renewal season one of the most difficult in memory. We said that we would update as the dust began to settle.
With RIMS fast approaching and April 1st renewals completed, now seemed to be a good time to provide that update. In the majority of classes of business there have been no meaningful changes (see narrative below). In others, shifts have occurred.
The following narratives are wider than just Lloyd’s and there is a broader Bermuda perspective paper also included. To keep the guide as simple as possible we have included an “updated” tab on each of the classes which have changed. You can then just click through to read our current commentary on those of most interest and relevance to your clients.
All updates are from a North American activity perspective.
Brief overview
The last few challenged market cycles witnessed a rapid influx of new capital including start-ups. This exerted a downwards pressure on rating and brought the harder cycle to an end. So far, no such capital influx on any scale has occurred. Hurricane Ian and the Ukraine war hit hard and unexpectedly at either end of 2022. Global geo-political circumstances leave capital uncertain, and the Markets’ fragile recovery position exposed.
These conditions then assist underwriters in maintaining a reasonably good level of discipline. However, the price points set by underwriters require uptake to hit income targets to pay for their reinsurance programmes and to fund their increased retentions. Particularly on higher excess layers many policyholders are non-renewing and electing to keep their own risks. The underwriting discipline therefore might not hold as the year unfolds and premium income competition heightens. Just look at the D&O sector as an example of what can rapidly change!
Your choice of broker to help you navigate and succeed is even more important.
