A new survey by international insurance broker Howden has concluded that growth ambitions remain “buoyant” in the London Market, with carriers citing a strategy to temper catastrophe exposure, and a desire to embrace sustainable energy.
Howden’s London Market Appetite Survey asked C-Suite representatives from 38 insurers to indicate the degree to which they plan to grow or contract GWP in 2022 by line of business.
The findings reinforced the impact of macro-economic trends across all lines of business, with growth ambitions widespread despite some unease around market mainstays such as catastrophe risk.
“Given the compounded rate environment that 2022 will bring, growth ambitions are buoyant across the market with very few contractions or withdrawals and most insurers looking to at least track rate or preferably grow beyond,” said Paul Cumberland, Executive Director, Howden Markets and Julia Hitchcock, Associate Director at Howden Markets.
“In contrast to previous, more turbulent years, we see net growth in all open market lines of business, as expressed to us by C-suite,” Cumberland continued. “Of course it remains to be seen whether the C-suite positioning will be met by line underwriter reality.”
Against a backdrop of above average catastrophe losses in 2021, increasing uncertainty driven by climate change and a waning faith in the integrity of catastrophe models, the vast majority of insurers in the survey cited a strategy of reducing the degree and proportion of catastrophe exposure in their overall portfolios for the 2022 YOA.
Cyber, another core line of the London Market, is also witnessing curbed appetite, as insurers expect large rate increases to be offset by other challenges.
“Price-elasticity in cyber insurance has been an open debate for some time,” said Scott Bailey, Divisional Managing Director of Cyber at Markel.
“We’re starting to see that pinch-point exceeded with clients now turning away from risk transfer more than ever before, or at least choosing to have more skin in the game to manage the premium increases as best they can.”
At the other end of the scale, strong appetite is evident for sustainable energy across the market, and at a disproportionate level to anticipated rate changes this year, suggesting other factors such as sustainability’s prominence in commercial agendas and a class of business at the start of its evolution.
However, Peter Fitzsimmons, Head of Onshore Renewable Energy, London at Axis, commented: “While London’s appetite is growing to accommodate this demand, it appears to be proceeding with caution.”
“The opportunity is perhaps being seen more as growth potential rather than strategic realignment, as this new capacity is hesitant to lead or to participate on some of the stand-alone renewable energy placements. Where risks are being written, the appetite appears to be strongest in offshore wind, where there is more investment from the large oil and gas companies.”
