London and international market update
This market update is designed to help you and your clients successfully navigate what remains a challenging marketplace. The timing of this “half year” edition is slightly later than normal and is the third one we have provided this year. By letting the dust settle after the July 1 renewals, our teams have been able to assess more clearly how they see market conditions as we enter the remainder of 2023.
In general terms, the market has stabilised as underwriters have adapted to their revised reinsurance and retention arrangements. There are still wide variations in what “stable” means for each sector.
For example, D&O is behaving very differently to CAT exposed property risks. External factors are still very much in play with high interest rates, geopolitical uncertainty and unstable climate conditions. Capital continues to be reticent to enter the market with any real significance, as we have seen in the past during harder market cycles. Rather than scale up with recruitment of new teams or to establish new fully capitalised entities (with all of the regulatory burdens that brings) there is instead a preference to support specialist MGAs led by seasoned underwriting professionals. A sign of things to come with more follow capacity willing to speculate?
Current risk modelling programmes are being tested to the limit. In some cases, such as wildfires, underwriters are learning to be cautious not to be too dependent upon models. This is where true underwriting skills once again come to the fore. Leaders being those that can understand and price risk.
The subscription market is demonstrating its value for policyholders as smaller shares allow underwriters to be bolder in their decision making and deployment of precious risk capital. Parametric underwriters and capital are also being used more frequently to complement gaps and shortfalls in property programmes.
Once again, our practitioners provide their views based on daily trading across many specialty lines of business.
We encourage you to contact them as you target new business and make plans for upcoming renewals. The sooner that you can engage the more value we can bring to you and your clients.
